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Agree, it's not orderly,

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JLS Member Profile
 
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JLS   Friday, 11/10/17 01:10:42 PM
Re: ChrisJP post# 3885
Post # of 3965 
Agree, it's not orderly,

but Market Makers make their money off the Spread (the difference between Bid and Ask). MMs don't care if the stock goes up or down. But they do care if there is frantic buying and selling by investors, and the MMs react to that by increasing the difference between Bid and Ask (as they should because the market is being more unpredictable, AKA higher volatility).

Nervous Nellies (average Joe traders) see the stock go down right away in the morning, so they get nervous and sell. IMHO, that's how to interpret the intraday opening. Cooler heads know better than to do that.

In the chart below is a chart I've had for a few days. The horizontal channel defined by green dashed lines is the range that I expect VRX to trade within for the near future. If VRX decides to carve out a new channel (whether flat or not) I will use that pattern to determine future trades (which means that as VRX shows signs of respecting overhead resistance I will be keeping the stock and selling Covered Calls on it to derive additional income). Those Calls will usually be chosen to expire withing one or two weeks. If my shares get assigned, I'll choose my price according to trading patterns within that channel to go back in (long the stock) and repeat. Or sometimes I'll roll the Calls out to the next expiration so that the shares don't get assigned.

Sometimes I refer to this Call-selling process as paying my own dividends.



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