Early Morning Activity by Anthony Trongone
Let The Trades Begin
Early Morning Activity
Can an analysis of early morning trading activity
offer you a forecasting advantage in the opening
hour of the equities market? Find out here.
When trading the spiders (SPDR S&P 500 ETF
Trust) in the opening hour of the regular
trading session (9:30–10:30 am ET), many
daytraders overlook early morning trading
volume as a forecasting indicator. Yet
trading activity during the 7:30–8:30 am
hour appears to have a strong impact on the
direction of equities.
The early hours
I looked into this further and studied data from
November 8, 2010, when the spiders (SPY) were
at $122.37 (7:30 am) and reached a closing price of
$156.24 (10:30 am) at the conclusion of this study
on March 31, 2013. This spectacular run of $33.87
was impressive but the focus of my study was on
trading from 9:30–10:30 am. In this opening hour,
the summary performance of the spiders was $6.42
in these 600 trading days. If, however, you use early
morning (7:30–8:30) trading volume as an indicator,
can this performance be improved?
Before entering a trading position during the early
morning hour, it’s a good policy to contrast its pricing
volatility with the daily trading range (highest–lowest
daily price) of $1.497. In comparison, its hourly average
was $0.786. Given this disparity, you can expect
wide price swings in this opening hour to deliver
either strong gains or inflict massive damage.