Sure enough, the next morning DELL was set to open 3 points below the close. I'll never forget the pain in my stomach watching that spread drop before the open. As rational knowledge of the numbers receded, fear-driven instinct took over. In total shock I sold into the open, just happy to be relieved of the pain. Immediately the stock went straight up like a rocket, well past the prior close.
Market insiders use fear to generate profits.
When conditions favor strong buying interest, stomach-churning gaps may be low risk trades. Correctly interpreting this market sentiment prepares you to capitalize on misinformed sellers. Taking a position at the wrong time can be very deadly to your equity account. You need to have confidence in your numbers and understand the market crowd. Seasoned traders recognize many redundant features in these morning setups.