<"Times of Day", for Stock Trading>

     David J,

     Yes, you are on to something important. I agree, in that there are definitely timeframes
     that have been identified as key potential "turning points" in the market, which are
     worth knowing about and making use of. The Futures traders (and many stock
     traders) have made nearly a science of studying this and creating different time-of-day
     rules and paradigms (e.g. "Pit Bull", etc...). Unfortunately there are really no consistent
     direct correspondences or mappings between time of day and market direction.
     Occasionally the market will lock into a pattern like the one you describe, but as soon
     as it is recognized, almost by definition that trading pattern changes and/or disappear.
     The more important thing to know is WHEN the market MIGHT be likely to change,
     and WHY. Of course, there are many other things that can bring that on besides
     TOD, but this one is on my short-list as a trader.

     The big ones that come to mind for me are described below (times per Eastern time
     zone). I do not offer this as "the truth" or something that can't be improved upon, just
     show how I see it; and I'm still learning. I could offer more times and get more concise,
     but in my experience for trading stocks, this is all you'll need to reach the point of
     diminishing returns. The Futures traders need to use, and do use, more granular,
     sophisticated time-of-day models. [This is an area where I learned a lot during my year
     of trading the S&P futures, which does help my stock trading.]

     9:30-10 "The Opening Period" - subject of a lengthy book to discuss properly. Also
     known as "Amateur Hour" (due to preponderance of market orders from public being
     filled to the best advantage of MM's)

     10-10:30 "Reveral Hour" - the pros generally try bring the market in, one way or
     another, the opposite direction to clean up their positions resulting from buying/selling
     the public (e.g. strong first half hour => they are short, must bring stocks in to cover).
     If the market opens strong and they can't bring them in during this critical timeframe,
     then you could likely be looking at a "trending" day, which is quite valuable to
     recognize early in the day (like today).

     10:30-2:00 Sometime in the next 60-90 minutes: "the mid-day doldrums" (usually)
     arrive. Flat trading during NYC lunch - daytraders typically give back a lot during this
     period, buyers out to lunch, trading ranges favor MM's. Good to avoid, many times. I
     often go out for a run during this period.

     2:00-3:00 - a strong counter-trend move - a time when they let the boys & girls in the
     futures pits have their fun (scores settled, etc.). Often the futures will drag stocks
     around by the nose during this period.

     3:00 The Bond market closes. A pivotal time - often if the Bonds close in stock's
     favor, the market will start to move more when the Bonds close. Or, the opposite.

     3:30-4:00 The "real" scores (actual buying and selling) are settled. Professional
     buying/selling sets in; in many ways this period is "the real day" in the stock market.
     Institutional buy/sell orders have to get filled, so they have to stop nibbling/faking it,
     and get the job done. They heck with VWAP (Volume-Weighted Average Price),
     playing MM games, etc just BUY THOSE PIGS (or sell). The big orders often show
     their true hand here. This happened today in the internets, but it occured a little earlier
     before the close.

     There are many possible variations and refinements to this. But it's not as easy as up at
     time 1, down at time 2; otherwise, all the S&P Futures traders would be rich beyond
     their wildest dreams in a short time period... we would have no Bus Drivers, Farmers,
     students, etc. Good stuff to study, though -- all part of learning how to "read the
     market environment" --a key skill.

     Good trading, -Steve
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