Statistics tell us that the great majority of the time, one end of the
daily price range of the S&P 500 occurs within the first hour of
trading! Consequently, if we can place a winning trade in the
first hour of trading, we'll have terrific trade placement. If
one of those 2000+ point trending days occurs, we'll have a big payday.
On days that persistently trend 1200+ points, it's critical to get
aboard the move early. Why? Well, after the market has trended
800+ points, most traders are anticipating the reversal and are very reluctant
to go with the trend.
By trading the first hour, I usually do not mean the first 25
minutes or so; this period's bid-ask spread (also known as the opening
bulge and amateur hour) is too great and price frequently reverses
around the 9:00 Central Time Cycle Timing point. We should therefore
usually not enter before 9:00. Sometimes, there may be compelling
reasons to enter earlier but this is usually a mistake.
By Charles Holt,
Real-time Trade Signals for S&P 500 & Nasdaq 100