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Why The First Few Minutes Of Trading Are Important
Why pay so much attention to the first few minutes of the trading day and who the top 10 or 15 stocks are right at the open?
As you know many times the market will "gap" open. That is, it will open stocks higher than they closed the day before. This is important because "something" is going to happen to that stock. It will either fall back down and be forgotten (great short) on the day or it will "fill the gap" meaning it will pull back and then possibly move higher again. There is no stronger indication of what stocks may move later in the day than to take notice of who is the point leader just a few minutes into the day.
Every morning you can scan the headlines for stock moving news and take note of a handfull of really interesting headlines, jot those companies down and in addition to them, you want to see who the "market" is moving. Many times you will see a stock up 3 or 4 dollars from yesterday's close and you cannot find one word of news about why it may be moving. These are often very interesting stocks to take note of because "something" is happening there and it warrants further investigation (inside buys, news leaks, new contracts, rumors of mergers, and all kinds of interesting things could be causing the move).
Another interesting thing about watching the "leaderboard" a few minutes after the open is to affirm your own research. For instance suppose you see a mention about the XYZ company looking good going forward. You do a little homework and decide that "yes, this is a good looking candidate". Well, if that stock opens strong the next day and is actually on the "most points gained" list right after the open, you have to watch that one! It should pull back some from that huge gap, base out and start climbing up again.
To put it frankly, you can scan thousands of headlines every morning looking for that one "gem" of a story that will give a stock a big boost and a lot of times you find it, but Wall Street will show you those stocks and dozens of others simply by the amount of excitement right at the open. Some of your best research can be started just two or three minutes after the bell. Look for point gainers, volume spikes, and % gainers. If you see a stock that is trading on the leader board and it is up 2 or more points from where it closed the day before, rest assured either it is being carried over from the news the day before, that morning's news, or some thing neat is going on!
Use the leaderboard as a tool, it tells a wonderful story. If you study it long enough you will see very evident patterns emerge, and you will be able to benefit from these patterns.
One last note: On a terrible day it is even more important to watch the leaderboard early. Why? Because even if the market beats them up and pulls them back, they could again be the winner the next day. Watch for that to happen often and you will find some good bargains the next day.
About the Author: Larry is the publisher of and is a recognized authority on the subject of trading and has been publishing his newsletter, Stocks2Watch®, since January of 1997. A free trial is available at: http://clik.to/stocks2watch