Watch the leader board
wallmann
This is the list of the top 10 or 15 stocks that can easily be found on
financial web sites like Yahoo! or on the financial channels. It's
sometimes call the "most points gained list." Good traders pay
close attention to the leader board, especially at the open of a new
session.
Many times the market will "gap" at the open as many stocks start
trading at a higher price than they closed the previous day. We closely
monitor the action in the leading stocks. Some will fall back down and
be forgotten for the rest of the day. Others will "fill the gap" which
means they will pull back and then move higher once more. For our
money, there is no stronger indication of what stocks may move later in
the day than to take notice of the point leaders just a few minutes
into the session.
Every morning we scan the headlines for stock-moving news, take note of
a handful of really interesting headlines, and jot those companies down
to track ourselves and present to readers. In addition, we want to see
what the market is moving via the leader board. Many times we will see
a stock up three or four dollars from the prior close but cannot find
one word of news about why it may be moving. These are often
interesting stocks to investigate because "something" is happening.
Insider buys, news leaks, new contracts, rumors of mergers and all
kinds of positive things could be causing the move.
Watching the leader board a few minutes after the open will also help
traders confirm their own research. Suppose we mention something about
the XYZ Company looking good going forward. You do a little homework
and decide that "yes, this is a good-looking candidate." Well, if that
stock opens strongly the next day and is actually on the leader board
right after the open, you should zero in on it. It should pull back
some from that huge gap, base out and start climbing up again. That's
a great spot to hop aboard for a day trade or short-term run.
We can scan hundreds headlines every morning looking for that one gem
of a story that will give a stock a big boost, and a lot of times we
find it. But Wall Street will show you those stocks and dozens of
others simply by the amount of excitement they generate right at the
open.
So some of your best research can be started just two or three minutes
after the bell. Look for point gainers, volume spikes, and percentage
gainers. If you see a stock that is trading on the leader board and it
is up two or more points from where it closed the day before, rest
assured that something good is going on.
One last note: On a terrible day it is more important than ever to
watch the early leader board. Why? Because stocks that are beaten up
but recover could be a big winner the next day. Watch for that and you
will find some bargains that could soar to the top of the next day's
leader board.
For more nightly trading tips: