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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: fftrader who wrote (5687)	11/24/1999 5:35:00 PM
From: Dan Clark	Read Replies (2) \| Respond to of 18137

ff, I live on the "left" coast also. I bounce out of bed at 5:00 am PST, all bright and shiny. (Actually, I sort of crawl out looking like somebody beat me senseless with a wet mullet.) It's tough, but we have to be early. Even if you don't want to trade, it's very important to understand where the market is heading and watching the pre-market helps you understand this. For example, you are watching AMZN from the open and you notice that it has gapped down two points. You think that it will probably close the gap. Instead it continues to head down. Why? Could you have predicted this a bit better? Let's replay the scenario. But now you chart AMZN's pre-market activity. You notice that the AMZN gapped up two points at 8:30 (EST), by 9:00 it was flat and by 9:30, it was still dropping steadily and had gapped down the two points. Now you can see that AMZN's movement just after the open is just a continuation of what happened prior to the open. Or, same scenario, but... This time AMZN had gapped down 5 points in the pre-market. From 9:00 to 9:30, it was steadily retracing and had regained 3 of the 5 point gap. So at the open, it continues it's retracement and closes the gap by 10:00. Or, let's say you are watching the S&P futures and S&P Mini (ES99Z in QCharts). Many times, the direction of the trend in the pre-market gives you a hint of what direction the market will head after the open. If it gaps down -10 points at 8:30 because of moderately bad economic news and then steadily retraces to -3 points, it's probably a good bet that the market will get better as the morning wears on. If it gaps down -1 point at 8:30 and then moves down to -3 by 9:30, it's already heading down at the open and the market will probably continue down from the open. While not perfect, looking at pre-market action can help you understand what will happen at the open. Hope this helps. Regards, Dan.