Trading Techniques | JUL 2005
Rising And Falling Overnight Sessions by Anthony Trongone, Ph.D.
Stocks & Commodities V. 23:7 (26-32): Rising And Falling Overnight Sessions by Anthony Trongone, Ph.D. Don’t overlook how the performance of an individual stock affects the direction of an index-tracking stock or commodity. Here’s an example using the NASDAQ 100. If history is any guide, knowing how and when individual companies perform within an index-tracking stock or commodity will help you identify profitable trading opportunities. Keeping track of the results could allow you to see a positive impact on your returns as the trading day comes to a close. To find out how this works, I focused on the 14 companies with the highest market capitalization in the Nasdaq 100 covering 770 trading days from January 2, 2002, to January 21, 2005. These companies (Figure 1) represent a cumulative weighting of 47.44% of the overall index. This extensive analysis will provide you with reliable trading strategies as well as the knowledge necessary to give you a statistical advantage when taking a position at either the open or close. The astute trader observes the effect of a difference in the rising or falling overnight trading session. Consider, for instance, what the cumulative results are when taking a long position at the start of the regular session after it experiences a rising or falling overnight session. After rising in the overnight session, there was a loss of -$190.74, but the company came away with $302.84 worth of earnings in the regular trading session. Since 11 stocks as well as the index-tracking stock were unable to produce similar performance results within each trading session (that is, stocks with a pattern of success overnight were unprofitable in the day session, but stocks with a pattern of failure in the overnight session are profitable during the day), several reliable trading strategies are possible. You can easily profit from these opportunities by simply trading one stock against another, one stock against an index-tracking stock or commodity, or by simply trading the index-tracking stock or the futures contract.
by Anthony Trongone, Ph.D., CFP, CTA
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.