What to Do When the Market Opens Big in One Direction

10/15/2012 6:00 am EST

Focus: TRADING

The staff at AllAboutTrends.net offer share common-sense ideas for keeping your head in the heat of trading.

As a rule of thumb, anytime a market opens big in either direction, NEVER take a trade in the opening direction of the market when you have a big opening move. The big move already occurred. Just think if you would have shorted MNST and AAPL and a lot of others out there at the open in the examples below—OUCH. The flip side is don’t react and sell either right away. On this day, just about everything has bounced since the open. Let the opening dust settle first and above all NEVER REACT.

Don’t blink!
How many times have we said it around here? Take a look at MNST, AAPL, SBUX below.

Just look at the chart notes in MNST, AAPL and SBUX just to name a few. Given the “Don’t Blink” nature of the markets we do this so you know in advance and are prepared for when and if an opportunity presents itself.

MNST

chart
Click to Enlarge

AAPL

chart
Click to Enlarge

SBUX

chart
Click to Enlarge

Instead of reacting to a big move AFTER the big move has taken place, pay attention to support levels and don’t be afraid to “buy in the face of fear” leading stocks that have successfully tested support levels.

By the Staff at AllAboutTrends.net.

Related Articles on TRADING