Wall Street Is Buying Like We're In A Bull Market

If you're not aware, "amateur hour" in the stock market refers to the first hour of trading, roughly from 9:30am ET to 10:30am ET. I'd extend that to perhaps 11:00am ET.

Over the past few months, we've seen very bearish action on Wall Street, but you'll likely be very surprised to see how the QQQ (ETF that tracks the NASDAQ 100) has traded intraday. For every day over a 3-month period, I looked at a 10-minute intraday chart and recorded the QQQ price at 10am, 11am, and 2pm, in addition to recording both the opening and closing prices each day. I then calculated the change in the QQQ for each of those periods (ie, opening gap, opening bell to 10am, 10am to 11am, 11am to 2pm, and 2pm to the close). I further broke my analysis down into 4 periods - two bearish periods (April 13 to May 20 and June 7 to June 17) and two bullish periods (May 23 to June 7 and June 17 to July 11).

Here were the NET gains (losses) of the QQQ by period and by time of day:

Enter QQQ:

Look at how the QQQ performance improves as the day moves along. It's simply confirmation of the notion that the opening bell and the first 60-90 minutes of trading TRULY IS amateur hour. From a trading perspective, however, this information is PURE GOLD. Trading is all about probabilities, so given this information, I'd say shorting stocks at 10am or 11am AFTER they've already dropped is a very poor idea. Shorting into strength in late afternoon makes much more sense.

However, I'm much more bullish now than I've been at any point in 2022, so I'm only looking at trading on the long side. I've been using morning gaps and intraday lows as opportunities to trade stocks on the long side. The most amazing stat in all of this, in my opinion, is that over the 3-month period studies, the QQQ lost more than 51 bucks. Yet, during this period of significant decline, the QQQ rose by more than 41 bucks in the final two hours of ALL trading days in the period. That's just mind-boggling and speaks volumes about the manipulation we see on Wall Street!

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.