Re: [CANSLIM] best time of day to trade?

From: "Tom Worley" <stkguru@netside.net>
Subject: Re: [CANSLIM] best time of day to trade?
Date: Fri, 3 Aug 2001 20:05:41 -0400
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Hi Spencer,

Sorry, can't re-assert myself, might offend more new members that
I am dominating and controlling :))

I disagree that the first half hour or so is amateur hour in the
markets. Many astute investors can only do their work in the
evening, and must enter market or limit orders for execution the
next day. I normally use only limit orders, thus could care less
whether it's executed five minutes into the day, or five minutes
from the close. I consider myself neither an amateur, nor a
professional trader.

I generally advise not entering orders of any kind (market or
limit) during at least the first 15 minutes, and preferably the
first 30. Most market moving news is either released after the
close, or before the open. Thus the early period is absorbing the
effect of last night's news, and this morning's pre-market news,
economics reports, etc. A gap up, or down, on the open can be
quickly reversed. Better to let the market tell you how it is
reacting to news events than to try to make your own guess.

I have filled a number of buy orders late in the day. That's when
volume often dries up, and a motivated seller must finally cave
in and sell at the bid instead of low offering. Maybe he has to
cover a buy done earlier that day, or meet a margin call.
Decimalization has narrowed the spreads, except on the truly
thinly traded stocks, so this is less likely to be a factor now
and in the future.

One member mentioned that this "Smart Money Index" has been in a
strong uptrend from March until just recently, when it began to
weaken. Comparing that to what the markets have done since March,
I would have to conclude its not a very accurate indicator based
on that statement.

I must agree that there is some degree of the "gaggle factor"
that is listening to the media airhead commentators, who suffer
no accountability for the daily babble. When I was a broker, I
had enough clients who were retired, and had the time to listen
to morning investment commentators, that I was forced to listen
to CNN daily, then run for my computer and phone to dig out some
fast research, as I knew I would be getting called about some
stock just hyped. Since I was aware of the street talk that this
particular commentator (since taken out of the business for
insider trading) typically front ran his pronouncements, I wanted
some real facts in front of me when the phone began to ring, and
I had to explain to my clients why, much as I liked making
commissions, it was a bad idea and would cost them money. Those
clients could indeed be termed amateurs, fortunately they had a
professional looking after them, so they were not a factor in the
first hour of trading.

Tom Worley
stkguru@netside.net
AIM: TexWorley

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Friday, August 03, 2001 10:01 AM
Subject: Re: [CANSLIM] best time of day to trade?


David:

     There is an article in IBD's Investors Corner I downloaded
(it might be in the archives of IBD.com)that confirms what you
said: The first half-hour of trading is usually done by amateurs
(the author of the article describes them disparagingly as "[the
gaggle] who follow the early mkt. cable babble...."

     He describes a market indicator (called, I believe, "The
Early Mkt. Indicator) and it is a divergence indicator.  It is
created by subtracting the change in the first 30 minutes of the
Dow from the change in the last hour of the Dow.  The result is
added to the previous day's total.

     The author interviewed one market analyst that is really
enthralled by it (a psychological/sentiment specialist) and
another who doesn't put too much stock (ha-ha) in it (I believe
he specializes in Elliott Waves).

     In any event it sound like a pretty neat (and probably
accurate) indicator to me-so long as, substantially, amateurs are
playing the first half hour, and pros are playing the last hour.

     There is a 2=BD-3 months lag time, and the last buy signal was
in December, 2001 (I believe.  I can't be absolutely certain
because my papers are in my motel room about a block away).  If
my memory is accurate the buy signal was correct (but the "lag
time" was a few weeks off): In late April-May, I believe there
was a brief rally.

     Tom, if you're lurking in the background, please re-assert
yourself. It'd be interesting to hear your views.  Tom, if I
recall correctly, was a broker for 10 years.

     As to your pointed question:  "When do you trade stocks"?  I
trade them when they leap about =BC past the pivot point on high
volume in a bull market. Of course I'm lucky in that this is the
way I make my living-so I sit in front of the computer all day.
If I didn't I would probably put in a limit order-and either hope
when the stock BO it does so on high volume, or I would trade
with a CANSLIM broker who also looks at volume on a BO (and so
would be more sympathetic to your order to only trade on a BO
when the BO is on very high volume).

     Also, I might add, that the WON admonishment that one trade
stocks with EPS,RS,A/D,SEMR[?]of >84,>84,>C,>C makes it more
likely that when the stock BO it will BO on high volume.

                        jans



On August 2, 2001 dbojanowsdi@csreit.com wrote:
I realize that there's probably no perfect answer to this but
I'll ask
anyway...when do you usually trade stocks?  I've heard that the
first hour
of trading is mostly amateurs and daytraders.  Many of the trades
executed
at that time were put in the night before when people get home
from work and
decide what they want to buy/sell the next day.  Then trading
from 3pm-4pm
is mostly professional traders, where the so-called experts
trade.  If you
want to buy some shares in a company and assuming there's no news
that would
sharply affect the price that day would you wait until after the
first hour
or enter a market order at the open?  I've seen stocks move one
way in the
first hour and then change course after 10:30am.  When do you
trade during
the day?






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