Opening Market Imbalances Dictate Premarket Futures Action
One aspect of our show that distinguishes us from any other premarket coverage is our focus on opening imbalances for stocks listed on the New York Stock Exchange. The reason: these imbalances will dictate the opening price of these issues and can be especially influential on days of monthly or quadruple witch expirations.
Monthly options expiration takes place on the third Friday of the month and quadruple expirations occur quarterly (March, June, September and December). On many occasions, the imbalances can provide for excellent trading setups.
On Friday, the imbalances started piling up to the buy side and carried the stock index futures along with them.
Just as co-host Dennis Dick noted that they all flipped to the sell side, the index shed a few points in a split second.
For more detail and education on the nuances of opening imbalances, you will need to become a daily listener of our show.
Finding Resistance In Schlumberger After Q4 Beat
Before the opening, Schlumberger Ltd. (NYSE: SLB) announced a 2-cent fourth-quarter EPS beat and a $78-million sales beat. Since neither hosts of the show are long-term bullish on the energy sector, neither were interested in chasing the issue on the upside, as it was in the green when it was being covered on Friday's show.
Potential areas of resistance were identified for the upcoming session for an exit for a long or a potential short sale setup. Based on the daily charts, the matching highs at $40.09 from Jan. 9 and 10 were pointed out as significant resistance levels for the upcoming session.
After trading slightly higher, Schlumberger had a brief retreat and found support just above Thursday's close ($38.78) at $38.82 and began to move higher. As of 11 a.m., the rally ended just below the above noted resistance level, as $39.97 stands as the high for the day. The stock closed the session down 1.01% at $38.37.
No Matter What, Sell The News In Gap
On Feb. 28, 2019, Gap Inc (NYSE: GPS) announced that it would spin off Old Navy and separate into two independent publicly traded companies. That news instigated one of the issue's biggest up days in years, rallying from its previous day close ($25.40) to $29.51 on March 1.
The only other time the issue has seen that price was briefly the following day and it has been a slow, steady decline ever since. After bottoming at $15.11 in September, the issue ended Thursday's session at $18.61.
The fact that the issue spiked to $21.40 in after-hours trading after it announced that Gap will not complete the spin-off was a shock to the entire PreMarket Prep crew.
As it turns out, the Street has rationally concluded the the cancellation of the spinoff is bad news for the company, as the issue went from green to red in Friday's session.
Gap shares ended Friday's session down 0.43% at $18.53.
Robo Global's Chris Buck Joins Tuesday
Greg Harmon of Dragonfly Capital Management joined midway through Friday's broadcast and discussed several issues in his portfolio and corresponding options strategies he's using to trade them.
PreMarket Prep is taking Monday off, as the markets will be closed for the Martin Luther King Jr. Day holiday.
On Tuesday's show at 8:35 a.m., Chris Buck, head of capital markets and sales for Robo Global, will join PreMarket Prep to discuss recent price action in the Robo Global ETF (ARCX: ROBO).
Public domain photo via Wikimedia.