Welcome To The Big Show
Each morning this list will contain those stocks with the potential to
make a quick but tradable move in the first hour. The information listed
here is designed for the trader who catches the early morning momentum, between
the first five and 45 minutes of trading. Many stocks open each morning, run for
several points and then reverse. I will cover stocks with this potential and
highlight possible reversal points and resistance areas. These points need to be
monitored closely, as the stocks may turn quickly here. Be ready to lock in
profits quickly.
Those which are
consistent morning movers with large average daily ranges are now highlighted by
the word “Hot”.
Make sure to register for my
upcoming course “The Baker/Ten Electronic Trading Course”, starting
July 7. Click
here to go to the registration page.
My latest trading lesson, Finding
Intraday Trendlines for Daytrading Part I, is also available now.
Morning Outlook
The Nasdaq futures are currently +43 points and the S&P futures are
+3.00 points, suggesting a positive open.
Watch for a turnaround in the first 10-30 minutes of trading. Keep an eye
on the stocks that gap the most in the morning. Use the Nasdaq futures or
tracking stock as leading indicators.
Heading Up
JDS Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating) is trading
near 114 in the pre-market, on 65,000+ shares. Look for resistance at 115
1/8, the intraday high from last week and a previous trouble spot. Conservative
traders will wait for above 115 1/4 before going long. Above this level, look
for trouble at 119 1/2 and 122 5/8.
HOT: SDLI
(
SDLI |
Quote |
Chart |
News |
PowerRating)
continues to move higher, now trading at 257. Look for resistance at 258 1/2,
260, and 262 1/2. SDLI has a strong intermediate-term chart, so many investors
will be watching it. It is also above all of its major MAs.
HOT: Rambus
(
RMBS |
Quote |
Chart |
News |
PowerRating)
is trading 3 points high on lighter-than-average pre-market volume. Watch for
resistance at 238, 240, and 242. Otherwise, it is above all of its major moving
averages.
Aether
(
AETH |
Quote |
Chart |
News |
PowerRating) is moving higher
again, with a bid currently sitting at 190. Look for support along the 5-day MA
as well as resistance near Friday’s high of 199. Expect more trouble near the
psychological level of 200, and again at 202. It’s also above all of its major
MAs.
iBeam Broadcasting
(
IBEM |
Quote |
Chart |
News |
PowerRating) is
trading 3 points higher in the pre-market. This recent IPO has no overhead
resistance and just completed a series of three lower highs. It is currently at
its all-time high.
Sycamore
(
SCMR |
Quote |
Chart |
News |
PowerRating) is trading just
under 100. The first trouble spot will be right at 100, followed by resistance
at the 100-day MA at 105. A move above 112 intraday will take it out of its
recent trading range, which could lead it higher as well. Above 112, there may
be resistance at 114 and 122 1/8.
Genome
(
GENE |
Quote |
Chart |
News |
PowerRating) is trading near 29
1/2, over the resistance spot at its 100-day MA. The next trouble spot is the
intraday high from several months ago near 30 1/8. Conservative traders should
wait for a move above this level.
This week’s split
announcements:Â NONE
Check back for Trading the Techs AM at
11:00 AM ET.
First Hour Trading
Techniques:
Day 1: Focus on those stocks
moving in the direction of the futures. If the Nasdaq futures are sharply higher
or lower, look to trade those issues trending the same direction with high
pre-market volume. At the same time, have a list of possible trades ready in the
case of a quick turnaround.
Day 2: Look to trade those
stocks with a high average intraday range, ideally 5 or more points. Watch for
the premarket spread to be 2 or more points, with a bid greater than the ask
(reverse for short plays).
Day 3: Make note of the prior
day’s five, 10-, and 20- period MAs from the five-minute charts of both the
stocks that you are looking to trade as well as the futures. Each of these
levels may act as both support and resistance.
Day 4: When using Nasdaq level
II quotes to monitor pre-market activity, be aware of which market maker or ECN
is on the bid and ask. Most pre-market activity occurs on Island, Instinet, and
Redibook. If the pre-market bids or asks are from the big brokerages, they may
simply be left over from Friday, which would not indicate a major price shift on
the open.
Day 5: Start making your morning
watch list by examining those stocks which had abnormally high volume during the
prior day. The stocks with the highest pre-market volume are likely to make the
most significant moves near the open.
Day 6: Each night, make a list
of those stocks which closed within 5% of their highs or lows on stronger than
average volume, as follow through is likely the next day.
Day 7: Note the open, high, low,
and close from the previous day of each stock you plan to trade, as each may
result in a turnaround.
Day 8: If you miss a move at the
open, watch for fliptop patterns to form. Watch for a stock to set an intraday
high in the first 15 minutes of trading, followed by a reversal, and then a move
back above the morning high, with possible entry points just over the morning
peak. Reverse for shorts.
Day 9: To gauge the direction of
a stock price near the open, use a time and sales long to see if the order in
pre-market trading are filling at the bid price or at the ask price.
Day 10: Remember that trading
the open is not only about catching early morning movers, but taking advantage
of reversals and fliptops as well.
Check back for Trading the Techs AM at
11:00 AM ET.
Until later,