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After Market Moves


It’s about 3.30pm in Australia and the S&P 500 e-mini is down around 5 points from the close in the US.
Does a 5 point move in after hours trading generally determine the market direction for the next trading day?
Sparkie, I'm not following the market very closely at the moment but a 5 point move like that after the close in the market is usually the result of 1 or 2 large adverse company announcements. Traders will usually mark the market down when MSFT, INTL, GOOG etc. have profit warnings. In this particular case it appears that a sell-off in China precipitated this move.

Your question, however, is not what causes the move but the impact that it has on the following day. This is called correlation analysis (okay I made that up but it's probably called something like that). You take as much data as possible and look at the change over period X and compare it to the change over period Y and determine if one influences the other and the degree of influence is measured by the correlation coefficient which is a value from -1 to 1. -1 is perfect inverse correlation and 1 is perfect correlation.

I have not run a study against those types of market moves and I do not know of any publicly available reports that will tell us that so at the moment I don't know what the answer is.

However, if you were to run this analysis, you would probably look at the change in market value from 16:30 EST to 8:30 or 9:30 EST the following day and compare it to the subsequent move up to 16:15 EST. The data should be fairly easy to collect and the correlation not too difficult to run. I'm too busy to run it at the moment but if you ask me by replying to this thread again in about a month's time, and assuming that I have the time, I'll try and run it for you.
DT, Thanks for the info. If you get time to run a test that would be great.
The pre market sell off yesterday didn’t stop the Bulls today.