Microsoft traded 250,000 shares in the entire pre-market session.
Then it did more than that in the first minute after the opening bell.
And people build a whole plan off what they see in the pre-market.
There was no order flow this morning at all. Everybody trading the S&Ps and not a single person following up in stock.
Nvidia had some size, sure, nowhere near where it should have been for the index to be moving around like that.
Which means you absolutely had no freaking clue what that flow was going to look like until the opening bell went off.
I’m not talking down on you. I don’t know either what’s gonna happen until the first half hour of the session plays out.
And that’s all due to the options market.
The options flow is what drives this thing, and that flow does not exist before the open. It gets created when the opening bell rings and the customers show up. No customers, no hedging, nothing pushing anything around.
So pre-market hands you a price with none of the mechanics underneath it.
Two things I’d do about it.
If you’ve got working orders sitting out there into a fast open, go cancel them. A morning like this is going to be violent in the first few minutes.
And then let it play, because that’s all you can do at this point. Don’t try to make something happen in the first 10 minutes.
So how do you know whether the flow is real before you put money on it?
There’s a way to check and it takes about a minute. I explain how it all works in a brand new checklist I put together.
To your success,
Don Kaufman
