My 2 Cents on Day Trading, Especially The First 30 Minutes
Current YTD Performance: +$1565
Holy CRAP. My life has been pretty damn super crazy this past few weeks. Never ending bombs of deadlines, ever changing direction, and never ending adhoc analysis @ work haunted me for days forcing me to work 60+ hrs a week. If that wasn’t enough, my ever exciting personal life kept me away from this keyboard for days. I must say though, life is pretty good.
I shall see tomorrow if my life continues to get better with the investment decision I made today on Master Card (MA) and Visa (V). I will explain more later…On a separate note, I think I’ve discovered a quite consistent pattern in the stock market over my last year of trading that should interest you inspired day traders . This is especially true in the first 10-20 mins after the market open on days with big news the night prior or the morning prior to the opening bell.
Key Learnings
* After a big positive news for the market (big earnings report, positive economic data, etc), the market tends to open strongly and loses its traction within the first 10-30 mins.
* Similarly, after a negative news prior to the opening bell (9:30AM EST), stocks tend to suffer pretty significantly but catches ground and rallies at least for a short while thereafter.
* Companies that are directly involved (i.e. quarterly earnings for that company) will see an even more amplified effect of the above phenomenon discussed.
* It’s extremely important to be aware of key reports during the trading hours (9:30AM - 4:00PM EST) that could sway the movement either way (e.g. employment report that comes out 30 mins after market open can impact the trend discussed here)
Here are a few examples that I remember personally:
* Freddie Mac (FRE) dropped nearly 50% within the first minute after the market open on the day when it hit its 52wk low (July 14th). Within the first 30 mins, the stock has rebounded over 20%.
* Freddie Mac (FRE) also opened 30% higher 2 days later after the Fed’s decision to provide additional borrowing power to the firm. Within the first 30 mins after open, the stock price suffered significantly, with the final closing price well below the opening price.
* Motorola (MOT) announced positive earnings today and the stock jumped by 10% immediately after the market opening. However, the stock quickly plumetted within the fisrt 30 mins.
I could go on and on about this trend I’ve discussed, but I think you should go find it out for yourself and take advantage. You can then thank me one day when you master this phenomenon.
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So going back to my investment decisions today. Master Card (MA) and Visa (V) both tanked today with the huge loss Master Card incurred due to the settlement charge with AMEX recently, leading its stock down 10%. This spilled over to Visa and killed its stock by 7% today as well.
Like I’ve said before, “Buy Panic”. I’ve been sticking to this motto, and it has treated me well so far. I’ve bought $20,000 worth of these two stocks today with the hopes of a rebound tomorrow. We shall see if I’m right!!
