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I think I have mentioned in some of my article that I would watch how the stock price and volume are moving during pre-market around 8-8.30. I have been observing and doing this for more than 100 trading days.

There seems to be a pattern of investors entering during this period. One group of them is the Big Boys (which are waiting to buy tradeable stocks) at value price.

I shall share a few examples of tradeable stocks. How do we define tradeable stocks?

Characteristics of Tradeable Stock

What I have observed so far in my own exercise, there are a few notable factor which could make a stock tradeable for the entire session.

• The previous After-Hours close should preferably be in positive above 10%

• The trading volume during pre-market would preferably be above

• There should be a gap in trading volume around 1.5 hours before market open

I shall use 12 May Pre-Market and Actual Trading Session as an example.

These are the 2 stocks I will use to explain why and how I would use it.

$Blue Bird(BLBD)$

How BLBD was traded in After Hours on 11 May 2023

We will look the volume traded during after-hours, it was at 151K, and there was a huge gain of 34.58%.

On top of this BLBD Q2 Non-GAAP EPS of $0.27 has beat the estimate of $0.19. There was an increase of 44.4% YoY revenue of $299.8M. The adjusted EBITDA was at $19.8M with 2,304 Buses Sold.

They also provide a strong FY2023 Guidance which increased Adj. EBITDA of Approx. to $60M.

So as investors and traders, how would we use the price and volume traded to determine if this stock is traded and have potential to gap up.

How BLBD was traded in Pre-Market on 12 May 2023

If we look at how BLBD was traded in pre-market on 12 May 2023, the investors interest does not seem to be high as the volume traded is low (only 35.86K).

So now we will look at how the stock is trading at 8pm(which is about 1.5 hours before market open).

We can see that trading volume start to pick up, and there have been activities built up till market open.

These trading volume could come from investors who has traded the day before.

With these volume pickup, normally I can deduce that there would be a gap up coming when market open.

You can try to deduce it yourself and see if it could work on the stock you would be following.

How BLBD was traded in Actual Session on 12 May 2023

As mentioned previously, we have seen that there is a considerable amount of trading volume 1.5 hours before market open.

There was a short gap up once market open when BUY volume surge, but this only last till 10.30 when BLBD try to create another high, but failed.

So this is what we need to be cautious when trading stock with earnings report news, though earnings revenue is positive and there was good guidance given, but it might not stay uptrend throughout the entire session.

Overall, BLBD is highly tradeable as the total volume for actual session was more than 2 million.

The reason why my A.I. model did not pick this stock after my assessment is because there might not be many opportunities for entry and exit point to make some gain.

$SURGEPAYS INC.(SURG)$

How SURG was traded in After Hours on 11 May 2023

SURG was having a more than 500k of trading volume, and there was a good 15.87% gain after After-hours.

This is also due to their Q1 GAAP EPS of $0.31 has beaten the estimate of $0.20, though revenue of $34.78M (+64.5% Y/Y) misses by $1.72M.

What would be important to investors and traders would be their 2023 outlook that their total revenues of at least $190 million and there will be positive operating cash flow in 2023.

Now we will look at how this stock would be trading during pre-market.

How SURG was traded in Pre-Market on 12 May 2023

If you look at how SURG is trading during pre-market, there was only a short interest when pre-market start, then trading basically is quite stagnant until 8pm.

There seem to be SELL volume at around 8pm for investors who wanted to sell their holdings, so from this, we could tell that there might be only a short period of gap up when market open.

How SURG was traded in Actual Session on 12 May 2023

Like what I have observed during pre-market, there is indeed only a short period of gap up. so it would make entry at premarket more favorable so we can take a quick good gain.

But there was a lot of opportunities throughout the entire session for good entry and gain.

Trading volume activities seem to be happening in the early session only. The total volume is less than 1M, but that is ok as long as it present us with opportunities to trade.

Summary

This is what I personally observed and use to look at whether a stock is tradeable for the day.

2 examples might not be enough to show how the decision and trading plan was made, but I believe it would be a good way we could start.

Maybe we can try to use this to monitor and observe stock for next week (Week 20).

Appreciate if you could share your thoughts in the comment section on whether it is a good practice to watch the price and trading volume at around 8-8.30 during pre-market.

Do like, share and comment on this article if you find this trading thought useful.

@TigerStars appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.