🧠 Pre-Market Indicators:
Bullish action is currently seen in the pre-market on the heels of AAPL and AMZN negative earnings reactions followed by the Non-Farm Payroll beat of over 88k. SPY/QQQ are currently trading inside the previous day’s range but are looking to resolve the ONH. Both have also reclaimed their 50 MA, so it’ll be interesting to see whether the market can maintain momentum into the 200 MA and Upper BB or flush down to the 50MA.
🌙 Overnight Inventory:
- Are we opening in or out of yesterday’s range (This will determine what % of previous day traders are now wrong if out of range)? We are resolving yesterday’s upper range and outside VA.
- Overnight Inventory – What % of activity is above or below settlement? 80% Net Long
- Where is the current price in relation to the overnight range? Near the ONH
- Is the shock in awe placed on the settle close or where the overnight futures trader wrong by pushing the price to far in one direction and are waking up with shock and awe? Yes
- Low shock and awe is when the open is in balance so you want to trade later when out of that balance. should I trade early or later? Sooner
Gappers and Strongest Sectors & Themes
Key market stocks such as Tech (PLTR/AVGO), Uranium/Nuclear, and Quantum Computing are displaying strength in the pre-market. Of particular note is GLD, which is currently between its 10/21 EMA.
DOUL beat on both the earnings and revenue side and so far is acting well in the pre-market. I do enjoy trading earnings gap ups in leading stocks, so these are setups I’ll be on the lookout for this earnings season – my preference is stocks are above all key daily MAs for these setups, so I will be looking to trade DUOL.
📍Scenario Analysis:
As with all sessions, I think it’s important to be open minded to ‘scenario analysis’ for how the indexes could unfold intraday, given the influence/correlation they have with the vast majority of stocks. Of course, one must also be vigilant for ‘left field’ market moving news headlines. With the power of social media, these can happen at a moments notice.
My main focus is on 1) quickly identifying where the $$ is flowing into or out of, 2) having my entry orders saved and ready 3) if we see constructive market action, take the best trades and GO!
📈 Mindset:
When you look at pre-market action. Don’t tell yourself that you “missed it”.
You missed nothing. Instead, look at it as a form of imbalance. The market is not in equilibrium. This means there will be action later. And that should excite you. So you have to gather your focus. Not waste your energy on FOMO.
There is always profits to be found in the charts. Low volume trading during pre-market means that if you entered a big position – it will go against you as you will become liquidity regardless. So always remember the bigger goal of scaling and not get too fixated on lowered volume action without understanding the deeper underlying effects of how low volume trading affects you scaling up.
🧭 Respect Your Rules:
Stick to professional trading principles, trading plans, and trading rules. Even if it doesn’t work out well, at least you have relied on the principles to channel your emotions away from blaming yourself/anything else.
HAVE RULES HAVE RULES HAVE RULES HAVE RULES (TRADING RULES WILL SAVE YOU
