In today’s market, timing is everything — especially in an environment where implied volatility can shift dramatically from the opening to the closing bell.
When we see high implied volatility right at the open, it’s tempting to jump in and ride the wave. But the truth is, real market strength takes time to settle in, and a smart trader knows when to sit tight, let the market cool off, and avoid the trap of overextending.
For example, one recent morning, several stocks with high volume opened strong, leading some traders to jump in without hesitation. In a market that’s consolidating — or as I like to say, “digesting” the recent gains — quick moves aren’t always the best approach.
Many of these stocks opened high but actually started dipping as the day wore on, confirming why taking profits on the opening pop can be such a powerful strategy.
This particular morning, the key movers were Cisco (CSCO), Boeing (BA) and Pfizer (PFE). All three opened strong, boosted by sector trends and initial bullish sentiment.
But by midday, these same stocks had lost their early momentum, proving that holding off — or better yet, taking profits right after the open — can pay off in a big way when implied volatility is high. Each stock ended lower than its morning peak, giving a clear signal that waiting for a pullback often sets us up for a better entry point.
For those of us focused on technicals, watching levels like the 8-day exponential moving average can provide even more clarity on timing our trades. Stocks often need to "consolidate" their gains, so when we see heavy buying right at the open, it’s wise to let those prices come down a bit and find balance.
Remember, trading isn’t just about capturing the action — it’s about knowing when the action has set up the ideal environment for the next move.
As I often say, the market has to “digest” what it’s been fed, and we’re seeing that in real-time today. When FOMC announcements and other major events are on the table, the market will naturally move up and down, creating fresh opportunities for those of us who are patient.
Patience isn’t just a virtue in trading…
It’s a strategy. By waiting for these pullbacks and keeping an eye on technical levels, we’re able to align our trades with more sustainable market trends rather than getting caught up in the volatility at the open.
So as you watch the next morning’s high-fliers, remember: A little patience can go a long way in ensuring you’re entering on solid ground.
I hope that helps!
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