In the hour or two before the start of each trading week, you’ll find me glued to my screens catching up on the weekend’s news and watching premarket trading volume.
It’s important to stay on top of the premarket price action because it gives traders a good idea of what to expect in the rush of volume the first 30 minutes of trading.
If I see a boatload of volume hitting the tape heading into the bell, odds are good it will be a fantastic week for Wiretap Alerts…
But if trading volume is sluggish, it means we need to pay even closer attention and stay nimble because just a few minutes can make the difference between a win… or an ugly red mark in the loss column. And no one wants that!
So when premarket trading volume came in light Monday morning, it took a cool head and steady hands to claw out another hat trick of winning trade for Wiretap Alerts, extending our winning streak.
And that leads me to a great topic for us to cover…
How to Analyze Premarket Trading Volume
Markets opened higher Monday only to quickly lose steam as volume in the Nasdaq and S&P 500 both dropped more than 20% under their 30-day averages.
We were able to reel in solid wins on Delta Air Lines Inc. (NYSE: DAL) and Wells Fargo & Co. (NYSE: WFC), but 10 minutes into the open, our trade on homebuilder D.R. Horton Inc. (NYSE: DHI) lagged behind…
But there was good news — analysts rated the stock a buy on Monday, so we just had to be a little more patient.
One of the tactics market makers love using is to withhold shares and options at the open to make traders sweat.
It’s common for retail traders to see that first big red candle and move straight into panic mode… But if we keep a lid on our emotions, we get to see what the real move is going to look like.
With DHI, the stock immediately began to rebound and around 10:10 a.m. EDT, we saw a nice breakout candle that capped a 40-minute, 2% rally in the underlying,helping Wiretap Alerts to turn an “L” into a “W.”
That’s a tenth trio of winning trades so far in 2022, bringing the strategy’s all-time winning percentage to 68.8% dating back to September 2021!* — BANG!
Check out the short video and let’s talk about premarket trading volume and two other critical factors traders can track that impact stocks and options before the bell.
And for more insights on how to trade outsized order flow through the weekend, be sure to catch me when I go LIVE at 11 a.m. EDT this Thursday, June 9, for a special trading event.
Don’t forget you can follow me @LanceIppolito on Twitter, Instagram and our YouTube channel for more trading insights and tips. And as always, you can find me right here talking stocks and options trading — and printing money — on WealthPress.com!
P.S. Obscure ‘Market Pattern’ Opening
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*Stated results are typical for given period. Past performance is not indicative of any future results. Trade at your own risk.