Time To React, Time To Wait

  • May 29, 2001
  • Eddie Kwong

The first
15 minutes of the trading session is probably the most volatile and
wild part of the day. Often the biggest move of the day occurs during these
15 minutes. Needless to say, the volatility creates opportunities, but it adds
more risks for daytraders. Even though the trend may look clear and
obvious, it is sometimes wise to observe the first 15 minutes of the market. I
know it is tough to wait, but patience pays off.

The chart below is a five-minute chart of Comverse Technology (CMVT).
As you can see, the stock nearly lost 2.50 points in the first 15 minutes of
trading before began to pull back from the low. If you are a pullback player,
the 10:05 a.m. bar provided a nice entry for short selling. Of course, for
breakdown traders, the 10:45 a.m. bar was an excellent short entry point. 

Let me give you another similar example. After losing almost a point in the
first 15 minutes, Newport Corp. (NEWP)
started to form a minor support around 37.50. At 10:05 a.m., short sellers
received a good opportunity to sell the issue on a breakdown below the support.

Don’t react too quickly. Waiting sometimes pays off.

Till Wednesday,

Eddie