How to Scan for Premarket Stock Gainers

Traders monitor breaking news or breakout price trends to scan for stock gainers.

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The Nasdaq premarket session in the U.S. runs from 4 to 9:29 a.m. Eastern Time -- right before the wider stock market opens at 9:30 a.m. Investors can use this time to scan for premarket stock gainers so they can buy early into a company whose stock price is in an upswing. To find the right stock gainers, some traders turn to fundamental news coming out on a stock that day. Other times, they employ technical tools that evaluate the historic price patterns of stocks. These tools help them understand how the stock's price might fluctuate that day.

Earning News

News events are important triggers that affect the price activity of a company stock. One example is earnings news. If the earnings rumors or report to be released by the company that day is positive, traders and other investors may anticipate a rise in the stock price and will try to buy in early at a lower price before the stock gains momentum. Investors also use analysts’ earlier estimates or recommendations on the stock or the industry as a whole before making their trade decisions.

Merger News

News or rumors of a merger deal is another driver of stock activity. This can affect either the target company or the acquiring company involved in the sale. In a merger case, the price of the target company can rise sharply if its owners or shareholders are set to receive cash during this sale. This rise usually kicks off long before the merger sale or deal falls through. In the case of a total buyout or acquisition, the acquiring company's stock price can also rise sharply if investors believe the decision enhances that company's future prospects.

Technical Chart

With technical charts, such as candle volume charts, some traders can monitor how other people are trading the stock. The premarket price trends can foreshadow a promising stock that is set to break out as a stock gainer. Specifically, traders can look at the volumes behind a price spike. If the volume is lower, it is often discounted as statistical noise. But if the volume behind a price tick is higher, this can predict a trend that can persist into the near future -- either into the market open or during the trading day.

Order Book

Traders also take a snapshot of the market book to understand the intentions of investors toward a stock. One point of reference is the depth of the book that contains the number and sizes of bids and offers in the market awaiting an execution. A buy imbalance can mean more buyers than sellers are in the market for a particular stock. The Nasdaq usually publishes this imbalance information shortly before the wider market opens. It can provide another deep snapshot of stocks that could be morning gainers.