How to explain quick price changes early in the morning
http://www.marketwatch.com/optionscenter/calendar would note some options expiration this week that may be a clue as this would be the typical end of quarter stuff so I suspect it may happen each quarter. http://www.investopedia.com/terms/t/triplewitchinghour.asp would note in part: Triple witching occurs when the contracts for stock index futures,   stock index options and stock options expire on the same day. Triple   witching days happen four times a year on the third Friday of March,   June, September and December. Triple witching days, particularly the   final hour of trading preceding the closing bell, can result in   escalated trading activity and volatility as traders close, roll out   or offset their expiring positions. June 17 would be the 3rd Friday as the 3rd and 10th were the previous two in the month. You may simply be asking why stocks 'gap up' or 'gap down' when the stock market opens. This is because the price adjusts to news that occurred while the exchanges were closed overnight. Perhaps Asian stocks crashed, or perhaps a news story was released in the New York Times about some major company. There are thousands of factors that affect market sentiment, and the big gaps that happen at the open of every trading day is the price of the stocks catching up to those factors. There are lots of good answers on here already.  There are actually lots of answers for this question.  Lots.  I have years of experience on the exchange feed side and there are hundreds and thousands of variables.   All of these variables are funneled into systems owned by large financial institutions (I used to manage these - and only a few companies in the world do this so not hard to guess who I work for).  Their computers then make trades based on all of these variables and equations.  There are variables as whacky as how many times was a company mentioned in an aggregate news feed down to your basic company financials.  But if there is a way to measure a company (or to just guess) there is an equation for it plugged into a super computer at a big bank. Now there are two important factors on why you see this mad dash in the morning: Now most of the rest of the day is also automated trades but by the time you are an hour into market open the computers for the most part have fulfilled their calendar buys.  Everyone else's answer is right too.  There is futures contracts that change, global exchange info changes, options expiring, basic news, whatever but all of these are amplified by the calendar day changing. "The gap up/down and rapid movement immediately following market open is due to overnight futures activity. In your example, SP500 on June 20, 2016 saw a 20-point gap up at market open. This was because the SP500 futures were trading 20 points higher at 9:30 AM than at its close on Friday. The index will always ""catch up"" with futures at market open. You can see that below. The top chart is the E-mini SP500 futures from Sunday night to Monday. Beneath it is the SP500 index."
One could use technical indicators in any number of ways...they aren't rigidly defined for use in any particular way.  If they were, only computers would use them. Having said that, moving averages are frequently used by people operating on the assumption that short-term price movements will soon be reverted back to a longer-term mean.  So if the price shoots up today, traders who use moving averages may believe it will come back down pretty soon.  If this is the belief (and it usually is for this type of trader), a price significantly above a moving average could indicate an overpriced stock.  A price below the moving average could indicate an underpriced stock. Similarly, a short-term moving average above the long-term moving average may indicate an overpriced stock.  When you are dealing with more than one frequency, though, there is more disagreement about how to use technical indicators.  Some traders would probably say the opposite: that a short term average above the long term average indicates an upward movement that will continue because they believe the stock has momentum. Note that I am not saying I believe in using these averages to predict mean reversion or momentum effects, just that traders who rely on moving averages frequently do. Your order may or may not be executed.  The price of stock can open anywhere.  Often yesterday's close is a good indication of today's open, but with a big event overnight, the open may be somewhere quite different.  You'll have to wait and see like the rest of us.  Also, even if it doesn't execute at the open, the price could vary during the day and it might execute later. "It's almost like why don't you wake up in the morning feeling exactly like you slept the earlier night? yeah, once in a while that'll happen, but it's not designed to be that way. Stuff happens. The close of the stock is what happened at 4 PM (for US stocks). The ""open"" is simply the first price ever, or an open price auction like NimChimpsky said. Most things that trade have an open/close cycle, even what seemingly trades all the time (some markets trade 23 hours). Forex trades in different exchanges which have overlapping timing but each market will have an open, high, low and close for each day - for what is the same underlying currency. Also, it's not exactly true that close<>open. Take the GS chart, Oct 1 2010 and Oct 4 2010 (there was a weekend in between). The Oct 1 close was the same as the Oct 4 open. Note that Oct 4 was a down day so it's in red - the open is the upper end of the body (not including the wick), and Oct 1 was an up day so its close was the upper end too. (Candles are drawn so that the open ends of the wicks are the High and Low of the period respectively, and the lower end of the body is the open if it was an up-day, meaning the stock closed higher than it opened, and the body in coloured green below. If the stock went down that day from the open, the body's in red and the lower end is the close. Vice-versa for the other end)  The way to get to this: Go to yahoo finance, choose a stock, go to historical prices, click download data (you should have about 10 years of data), paste into excel, insert a formula to check if prev day's close = current day's open, and I'm sure you'll see at least one instance per stock." Quoted from money.howstuffworks.com: NASDAQ has come up with an auction approach called the opening cross. Here's how it works. In the morning, a computer program looks at all the orders that have come in overnight in each different stock. Based on those orders, the program picks a price level that would be the best opening price. However, it also looks to see if there's a trade imbalance. For example, if a company announced bad news after the market closed, there might be 10 times more sell orders than buy orders. NASDAQ then broadcasts the price and imbalance information to its network of dealers with the goal of offsetting the imbalance. It then lets dealers place orders. This all happens very quickly, in a time window of two minutes or so, right before the market opens. Dealers can place orders, and those orders are factored into the opening price. Further reading here: Opening Price calculation "If the stock is below its purchase price, there is no way to exit the position immediately without taking losses. Since presumably you had Good Reasons for buying that stock that haven't changed overnight, what you should probably do is just hold it and wait for the stock to come back up. Otherwise you're putting yourself into an ongoing pattern of ""buy high, sell low"", which is precisely what you don't want to do. If you actually agree with the market that you made a mistake and believe that the stock will not recover any part of the loss quickly (and indeed will continue going down), you could sell immediately and take your losses rather than waiting and possibly taking more losses. Of course if the stock DOES recover you've made the wrong bet. There are conditions under which the pros will use futures to buffer a swing. But that's essentially a side bet, and what it saves you has to be balanced against what it costs you and how certain you are that you NOW can predict the stock's motion. This whole thing is one of many reasons individuals are encouraged to work with index funds, and to buy-and-hold, rather than playing with individual stocks. It is essentially impossible to reliably ""time the market"", so all you can do is research a stock to death before making a bet on it. Much easier, and safer, to have your money riding on the market as a whole so the behavior of any one stock doesn't throw you into a panic. If you can't deal with the fact that stocks go down as well as up, you probably shouldn't be in the market." "First, I would like to use a better chart.  In my opinion, a close of day line chart obscures a lot of important information.  Here is a daily OHLC log chart:  The initial drop from the 1099.23 close on Oct 3 was to 839.8 intraday, to close at 899.22 on Oct 10.  After this the market was still very volatile and reached a low of 747.78 on Nov 20, closing only slightly higher than this.  It traded as high as 934.70 on Jan 6, 2009, but the whole period of Nov 24 - Feb 13 was somewhat of a trading range of roughly 800-900.  Despite this, the news reports of the time were frequently saying things like ""this isn't going to be a V shaped recovery, it is going to be U shaped.""  The roughly one week dip you see Feb 27 - Mar 9 taking it to an intraday low of 666.79 (only about 11% below the previous low) on first glance appears to be just a continuation of the previous trend.   However... The Mar 10 uptrend started with various news articles (such as this one) which I recall at the time suggested things like reinstating the parts of the Glass–Steagall Act of 1933 which had been repealed by the Gramm–Leach–Bliley Act.  Although these attempts appear to have been unsuccessful, the widespread telegraphing of such attempts in the media seemed to have reversed a common notion which I saw widespread on forums and other places that, ""we are going to be in this mess forever, the market has nowhere to go but down, and therefore shorting the market is a good idea now.""  I don't find the article itself, but one prominent theme was the ""up-tick"" rule on short selling: source From this viewpoint, then, that the last dip was driven not so much by a recognition that the economy was really in the toilet (as this really was discounted in the first drop and at least by late November had already been figured into the price).  Instead, it was sort of the opposite of a market top, where now you started seeing individual investors jump on the band-wagon and decide that now was the time for a foray into selling (short).  The fact that the up-tick rule was likely to be re-instated had a noticeable effect on halting the final slide." "During market hours, there are a lot of dealers offering to buy and sell all exchange traded stocks. Dealers don't actually care about the company's fundamentals and they set their prices purely based on order flow. If more people start to buy than sell, the dealer notices his inventory going down and starts upping the price (both his bid and ask). There are also traders who may not be ""dealers"", but are willing to sell if the price goes high enough or buy if the price goes low enough. This keeps the prices humming along smoothly. During normal trading hours, if you buy something and turn around and sell it two minutes later, you'll probably be losing a couple cents per share. Outside normal market hours, the dealers who continue to have a bid and ask listed know that they don't have access to good price information --  there isn't a liquid market of continuous buying and selling for the dealer to set prices he considers safe. So what does he do? He widens the spread. He doesn't know what the market will open tomorrow at and doesn't know if he'll be able to react quickly to news. So instead of bidding $34.48 and offering at $34.52, he'll move that out to $33 and $36. The dealer still makes money sometimes off this because maybe some trader realized that he has options expiring tomorrow, or a short position that he's going to get a margin call on, or some kind of event that pretty much forces him to trade. Or maybe he's just panicking and overreacting to some news. So why not trade after hours? Because there's no liquidity, and trading when there's no liquidity costs you a lot." A stock's price does not move in a completely continuous fashion.  It moves in discrete steps depending on who is buying/selling at given prices. I'm guessing that by opening bell the price for buying/selling a particular stock has changed based on information obtained overnight. A company's stock closes at $40.  Overnight, news breaks that the company's top selling product has a massive defect.  The next morning the market opens.  Are there any buyers of the stock at $40?  Probably not.  The first trade of the stock takes place at $30 and is thus, not the same as the previous day's close. Good points. It's not a completely new shift, as some equities are behaving as one would historically expect: $LMT just missed earnings and investors are responding appropriately. So while overall things seem somewhat strange, there are still classic signs of behavior. If you intend to be responsive to news and intraday price moves, for foreign stocks these will often happen while you're asleep (e.g. the Tokyo Stock Exchange opens at roughly midnight UK time). The first statement is talking about a sudden sharp increase in volume (double or more of average volume) with a sudden increase in price. In other words, there has been a last rush to buy the stock exhausting all the current bulls (buyers), so the bears (sellers) take over, at least temporarily. Whilst the second statement is talking about a gradual increase in volume as the price up trends (thus the use of a volume oscillator). In other words (in an uptrend), the bulls (buyers) are gradually increasing in numbers sending the price higher, and new buyers keep entering the market. (The opposite is the case for a down-trend). You should not trade based on what news is just released, if you try you will be too slow to react most of the time. In many cases the news is already priced into the stock during the anticipation of the news being released. Other times as soon as the news is released the price will gap up or down in response to the news.  Some times when you think that the news is good, like new record profits have been achieved, but the share price goes down instead of up. This may be due to the expectation of the record profits by analysts to be 20% more than last year, but the company only achieves 10% more than last year. So the news is actually seen as bad because, even though record profits, it hasn't met expectations. The same can happen in the other direction, a company may make a loss and the share price goes up. This may be because it was expected to make a 50% loss but only made a 20% loss due to cost cutting, so this is seen as a good thing and the price can shoot up, especially if it had been beaten down for months. An other example is when the Federal Reserve in the USA put up interest rates earlier this month. Some may have seen this as bad news and expected share prices to fall, but instead prices rallied. This was actually seen as good news, firstly because it had been expected for a long time, and secondly and more importantly because a small rise in interest rates after many years of near zero rates is a sign of the economy finally starting to improve. If the economy is improving, that means more people will have jobs, more people will be spending more money, companies will start to make higher revenues and start to expand, which means higher profits and higher share prices. A better way to trade is to have a written trading plan and use technical analysis to develop a set of buy and sell criteria that you follow to the tea. Then back test your trading plan through various market conditions to make sure you get a positive expectancy. The main source is a direct feed from the stock market itself. The faster the feed, the more expensive. 15-minute delay is essentially free... and for those of us who do long-term investment is more than adequate.  If you want data sooner, sign up with a brokerage that provides that service as part of what you're paying them for... and remember that every bit you spend on services is that much more profit you have to make just to break even, so there's a real tradeoff. "For any large company, there's a lot of activity, and if you sell at ""market"" your buy or sell will execute in seconds within a penny or two of the real-time ""market"" price.  I often sell at ""limit"" a few cents above market, and those sell within 20 minutes usually.  For much smaller companies, obviously you are beholden to a buyer also wanting that stock, but those are not on major exchanges.  You never see whose buy order you're selling into, that all happens behind the curtain so to speak." The sentiment is because between closing and opening a lot can happen, and between opening and the time your order actually goes through, even more can happen.  An after-hours trade has an extra amount of short-term risk attached; the price of a stock at the opening bell is technically the same as its price as of the closing the previous trading day, but within a tenth of a second, which is forever in a computerized exchange, that price may move drastically one way or the other, based on news and on other markets. The sentiment, therefore, is simple; if you're trading after-hours, you're trading risky. You're not trading based on what the market's actually doing, you're trading based on what you think the market will do in the morning, and there's still more math going on every second in the privately-held supercomputers in rented cubes in the NYSE basement than you could do all night, digesting this news and projecting what it's going to do to the stocks. Now, if you've done your homework and the stock looks like a good long-term buy, with or without any after-hours news, then place the order at 3 in the morning; who cares what the stock's gonna do at the opening bell. You're gonna hold that stock for the next ten years, maybe; what it does in 5 seconds of opening turmoil is relatively minor compared to the monthly trends that you should be worrying about.