8 Items That Impact Daily Trades

Investopedia:

1. Overseas Market/Economic Action

The New York Stock Exchange (NYSE) opens for business at 9:30am EST each day. However, prior to the opening trade on the "New York", equity markets in Asia and Europe have already (or almost) finished their trading day. The point is, if certain stocks and/or sectors have had a particularly good or bad day in those markets, the sentiment could have an impact on trading here in the U.S.

2. Economic Data

In choosing when to invest, you should be aware of any economic news that is or will be coming out around the time you go to enter your position. If a highly anticipated economic release is set to come out that may lead to market volatility, it might be best to wait for its release instead of jumping in beforehand.

3. Futures Data

Although an individual might be eager to buy or sell stock "at the open" at a favorable price, futures data will give the individual a better idea of whether that will actually be possible. ... In short, investors should check to see if futures contracts are trading higher or lower in pre-market trading. This will give them a better feel for where the index they are tracking might be headed "after the open".

4. Buying at the Open

A lot of buying and/or selling typically occurs within the first hour of the trading day. The opening hour of trading is basically the first time that most market participants have to enter or exit the stock, which can easily produce higher-than-average trading volume. These market participants are reacting to the myriad of news stories that came out between yesterday's close and today's open, which includes major market news events like economic reports and political changes.

5. Midday Trading Lull

There is typically a drop off in trading (meaning the volume of transaction) at noon as most of the major news events are out in the market. During this lull, stock prices can often lose some ground.

When this happens, stocks can be purchased at a cheaper price at 1pm than they could at, say, 11am. Again, this is important to know, as this can affect both entry and exit points.

6. Analyst Upgrades/Downgrades

An analyst may disseminate an intraday note that can have a significant impact on a given stock and/or sector. As a tip, remember to scan financial websites or watch business reports on television. If a large company has just been upgraded or downgraded, try to judge the potential impact on certain industries and the market as a whole.

7. Web-Related Articles

The internet has transformed the way people invest, as well as the way the public at large obtains news; therefore, if a web writer or journalist disseminates a bullish or bearish article about a company throughout the trading day, this can have a huge impact on its stock.

8. Friday Trading

Even if you're a "buy and hold" investor, a significant number of retail and institutional traders typically liquidate their equities on Friday (usually in the afternoon), so they don't have to hold their positions and assume risk through the weekend.

It means that stocks can and often sell off Friday afternoon during the last few hours of the trading day, if for no other reason than traders are looking to go home "flat" (without positions on their books). Keep this in mind on Fridays if you are trying to find a favorable time to enter or exit a stock position.