Pre-market Alerts are important to know if you trade as they clue in on which stocks (good or bad) are due for a lot of movement right out the gate. Investors can then prepare for these stocks to trade accordingly either buying up opportunities or selling down risks. Below is my plan for some of the key stocks to watch in the pre-market session today along with an analysis and explanation for why I am watching each one.
Pre-Market Trading Idea
Pre-market trading: From 4 a.m. - 9:30 a.m., investors can use this time to respond to events and news in the overnight hours prior to standard session open times. This time is important to understand the sentiment of the market and form your first investment in them. Though the pre-market trading may have some benefits, it is low in liquidity and has higher volatility, so one should spend time on proper analysis before choosing any strategy.
Stocks to Watch Today
Tesla, Inc. (TSLA)
Price Movement: +14%
Volume: 1.4 million shares
Why: Quarterly delivery record and profitable earnings block.
Bottom line: Tesla shares are soaring pre-market following an impressive quarterly report and another quarter of continued dominance in the electric vehicle market, renewing investor confidence.
Pfizer Inc. (PFE)
Price Movement: +11%
Volume: 900,000 shares
Cause: FDA clearance of a new drug.
AnalyzingIt: The recent approval of a new treatment makes investors like Pfizer much more attractive in pre-market trading.
Zoom Video Communications, Inc. (ZM)
Price Movement: -10%
Volume: 750,000 shares
Reason: Slowing user growth and guided cautiously on earnings.
Analysis: Even with the pandemic-driven boom in Zoom, the company has some headwinds to navigate as seen from having its stock get pummeled ahead of market open.
Key Market Indicators
Pre-market indicators like futures contracts on major indices (e.g., Nasdaq, S&P 500), reflect what the market is anticipating for the day. These are important indicators for getting a feel of the overall state of market sentiment and for readiness to react at times when possible.
Nasdaq Futures: Nasdaq futures up tech and growth stock sentiment is positive. Monitoring these activities helps investors to identify trends in the market ahead of time.
Dow Futures: The stock market is very jittery tonight in regard to Dow futures commentary, which apparently are indicating a steep drop if you're following at home. Improvement suggests the bulls are coming out to play and a drop could show bears taking some profits off the table.
Sector-Specific Movements
Pre-market activity often indicates sector trends. Markets can also be influenced by sector-specific news like regulatory approvals that make healthcare stocks surge, or innovative announcements in technology stocks at the beginning of a trading day so on and so forth.
Technology: Significant moves on Innovations & earnings reports. Apple and Microsoft, for example, have tended to be in the vanguard based off of price action and news flow on a macro basis.
Health Care Sector: It is all about regulatory approvals and clinical trial results. The shares of Pfizer and Moderna are scrutinized - news is a factor that can swing their prices.
Impact of Market News
Big news events are known to change the direction of pre-market trading significantly. Influential pre-market influencers: Economic events, Geopolitical news, and Corporate announcements developments are three main factors of the stock market before opening up during a session.
Economic Data: Results such as employment, inflation, and GDP growth can cast a long shadow over market sentiment. If you got positive data, your investor confidence also increased and vice versa.
Geopolitical Developments: As news relating to international relations, trade policies, and global conflicts develop there can be a lot of market volatility that carries over into the day from pre-market.
Pre-Market Movers Trading Techniques
However, trading in the pre-market usually requires a very specific strategy and risk management. Here are some tips:
- However, do not be too far from touch with the latest news and updates that you should know that could affect some stocks.
- Analyzing Volume: Stronger levels can indicate stronger trends.
- Stop-Loss Orders: Avoid major losses by setting stop-loss orders to protect yourself.
- Spread the love: Ensure you spread your investments across different sectors so that risk is mitigated.
Conclusion
Checking pre-market alerts, and keeping smartphones near do study all the influencers of stock movements is crucial for making smart trading calls. Monitoring key pre-market trading levels for insight into the market mood and major economic trends, may help investors trade in this volatile environment and position themselves more effectively.
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