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Overnight & Pre-Opening Range As Market Tell at Trader’s Narrative

Overnight & Pre-Opening Range As Market Tell

I suggested yesterday that the overnight and pre-market range would be a good market tell for what we had in store today.

I really meant what the market would do after it had set this range. The classic interpretation is that if it breaks down, a lot of people would be disappointed and in a loss, increasing the chance of another cascade down.

But on the other hand, if it breaks above the range, it would also set the precedent for the coming trading day and we would close the gap.

Which is exactly what happened:

overnight preopen range

As you can see, the range was quite tight. It broke down to 1255 but after several attempts didn’t break down any further. In the morning we had a spike up and in a furiously fast market we raced up. There’s something magnetic about gaps - they are almost always filled in.

The tell was clear but you still needed some nimble fingers (or preset conditional orders) to be able to get in and out.

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3 Responses to “Overnight & Pre-Opening Range As Market Tell”  

  1. 1 LP

    The piper has come and the US has nothing to pay. If we are saved for the moment, our children will pay tomorrow.

    No more cuts, no more free money (only to be taxed later) from congress, no more big loans to buy TVs and superbowl tickets and no quick fixes. It’s time to pay up for our frivolous attitudes. Time to eliminate the excesses and build a better tomorrow. I’m tired of the falling dollar, the worthless $40 trillion CDO market, the fact that everyone is trying to avoid a recession (which btw is a very natural cycle). No more.

    In all honesty I hope we do face a recession even if it’s a bad one, and even if it affects me. The point is if we get bailed out yet again, the common man will continue doing the dumb shit he’s been doing for a long time and he’ll think that someone will come to save him. A recession is hard but we have to accept it. In the mean time, we need to understand that living of credit unnecessarily is not so smart for us personally, for business or for the government. It has to come to an end somewhere. This is my dumb opinion.

  2. 2 LP

    BTW…good call on the Pre market stuff…

  3. 3 Z

    Sure, yeah, gaps filled in by itself. the psychology of the markets, blah blah blah.

    draw where the limit down line is, and see for yourself. SP was held just a few ticks above the limit down breakers.

    and then hours later a surprise Fed cut, 75 (!!!!!) BPS

    later on, GS announces they expect more cuts down the road

    all coincidence, of course?

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