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upon the opening price, which will probably be significantly different from the previous close. |
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Sometimes what seems like an important news event may not affect the price of a stock as much as you thought it would because the news may very well have already been anticipated and is already reflected in the current market price for that stock. When this phenomenon occurs, it is said that the market has "discounted" the news in advance. |
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When I wake up in the morning, I watch the morning business news on TV. The most current news will be on TV but will not always be in the Wall Street Journal, which has been printed the night before. Incidentally, I normally watch CNBC. When I arrive in the office, I match the news with the preopening market-maker quotes in order to see how the news impacted the market. If a stock such as Intel reports that it may be lowering the price of its product, I want to see what impact this news will have on Intel and related stocks in the same industry, such as VSLI, NVLS, AMAT, and a variety of others. |
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I also check Reuters, the TV in the office, and the current ticker in order to see upgrades and downgrades of stock. I also study Investor's Business Daily in order to identify stocks breaking out or falling out of favor and the impact on any one stock or any group of stocks, because that is where the volatility in the opening prices in the Nasdaq market may occur. As I approach the market opening, I try to determine if my trading decision on these particular stocks is still appropriate. Generally, if a stock is priced significantly lower on the opening than I expect from my analysis of the news, I may be hesitant to follow a down direction. The reason is that the market makers may have lowered the stock so far that it may rebound in the next few minutes. The market makers may have so many sell orders in hand that they gap the stock dramatically lower in order to buy the shares at very opportunistic prices and resell them immediately to bargain hunters who come in shortly after the open. |
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In order to understand the psychology of the market, you must have some insight into crowd mass psychology. When |
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