Would you please speak to the advantages/disadvantages of buying during the first 30 to 45 minutes of the open market trade and the last hour of the market? (October 29, 2001)

  A difficult decision is when to buy. It seems easy, and most of the time it is. You see a stock move above a breakout point and you buy. If the move is early, do you buy then or do you wait for the morning tug of war to resolve itself and then buy later? What is our perfect scenario? When a stock builds up volume all session long and then breaks out later in the session, preferably after lunch. We have seen volume move up toward what we want it to be and then the stock makes the move, usually on volume that is already at the level we would prefer it to be. Investing like life is not perfect. Many times a stock will hit the buy point early in the session and then never look back, galloping away. If we wait we get left out totally on the move as the stock has already shot 5% beyond the buy point.

We would prefer not to buy right out of the gates, but sometimes a stock that has been forming a great pattern makes the move early. If we like the pattern and it triggers that buy point, we will look at picking up some shares, particularly if we are not going to be around to watch to see if it runs higher and then tests the breakout intraday, etc. Then after lunch we will take another look to see the status. If it has come back to test the breakout and has moved or is moving up off of that level and the volume is strong, we will then add to or complete our buy. If it has reversed on us and is selling below the pivot point on high volume, we obviously won't add to the position. We will see how it closes that day, checking before the close to see where it is vis a vis the pivot point and what the volume is. If a breakout from a cup with handle, etc. has reversed intraday on high volume, that is not a good sign; it may proceed to the bottom of its base or worse. We can either sell at that point or wait for the next session to see how the stock performs. This is usually only a significant problem in a market that is trending down or is suffering a bit of topping action either minor or severe. When breakouts don't work by the scads, the action is not right to the upside.

Right now we are seeing more breakouts work than not, but there are still stocks getting tossed right back down, e.g., BVF today. It was one of my personal favorites and I jumped in after about 15 minutes when it tried to bounce up off the breakout point it gapped above, but I jumped the gun. It recovered off of a test of the 18 day MVA on the low, but ti was still below that strong move on Friday on lower but still very high volume. I am going to see if that 18 day MVA continues to hold; strong volume followed by strong volume down is always a warning flag. I believe BVF will be okay based on what I have seen from the stock, but I am not going to let one position, no matter what my gut feel is, take down a portfolio.

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