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Can someone explain what happened here?

chart1

It appears that the stock price fell by nearly 10% between the time the AH market closed at 19:59 and the time it opened again at 06:00

How is this possible? The volume for those two ticks were only 164 and 100, respectively, whereas the nearby candles have much higher volume and do not move the price hardly at all. The next highest volume candle is 1300 and only moves the price $0.82 cents

chart2

I thought volume dictates the amount the price changes? How does the stock price change so drastically on so little volume during the seconds between the extended close/open?

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  • How much real time passed between the price changes? Markets are moving wildly right now so even if it was a few hours I wouldn't be surprised by a 10% change in that time. The market doesn't need to be open for people's estimate of the price to change. If the market was closed overnight and someone announced that they discovered cold fusion before it opened then every energy stock would be crushed when the market did open. Mar 18 '20 at 16:14
  • @RWP 8pm to 6am ET... So are there other markets trading this stock during that time? Because if not, then whats driving the price change if there are no sales going on?
    – cds333
    Mar 19 '20 at 11:32
  • @cds333 Whether or not the stock is traded, the fundamental realities of the business can change. If a Boeing airplane crashes on Sunday night, and a news report says that its because of faulty programming, hasn't the true value of Boeing dropped, whether or not anyone has traded it yet? Mar 19 '20 at 12:55
  • @Grade'Eh'Bacon ok, but one need only visit stocktwits to see that there are always people bullish on SOXL, no matter what day or time. There's always some guy willing to pay market price. I find it hard to believe that not a single person would pay over $70/share on a popular stock that closed at $80.
    – cds333
    Mar 19 '20 at 13:46
  • @cds333 Have you not noticed what happened in the last week? Market realities can change very quickly. Turns out not a single person would pay over $70 on this particular stock that closed at $80. You're looking at one of the worst stock crashes in market history, so this is not a common thing, but it clearly isn't impossible, either. Mar 19 '20 at 13:50
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The price of a stock [or the cumulative price of many stocks, which form the overall price of an index] is based purely on the latest price change.

If I own shares in an airline, and that airline shuts down operations due to, say, a global pandemic, I will no longer expect to receive the 'old price' when selling them. So I will lower my expectations. Likewise buyers will not offer the 'old price', they will only be willing to pay a lower amount.

When a single trade happens at the new price, that becomes the price, period.

Usually high volumes of trades are needed to shift price, without abnormal events shifting expected value of the shares. So if 1,000 shares are on offer for $100, and 500 shares on offer for $101, then 1,000 shares would need to be bought before the $101 price is the lowest available price, and then another 500 shares would need to be sold before the price rises again.

It seems you are using an attempt at 'technical analysis' to determine how to 'time' the market. This is incredibly risky. I would further caution you to never invest in something you do not fully understand - asking questions like this is a great way to increase your understanding, but always be sure to ask such questions before you put your money at risk, and not after.

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  • I made no attempt to time anything. I simply asked why the opening price wasn't closer to the closing price.
    – cds333
    Mar 18 '20 at 14:49
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    This does not explain why the opening price is not the same as the closing price. What happened between the time the market closed at 8pm and the time the market opened at 6am that changed the price so drastically? Are there foreign markets trading during that time?
    – cds333
    Mar 18 '20 at 14:51
  • "When a single trade happens at the new price, that becomes the price, period." - So you are saying one guy bought 100 shares at 6am precisely, from a guy who put them up for sale at $70 the previous night, when the share price was $80?
    – cds333
    Mar 18 '20 at 15:14
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    @cds333 they would not have left the price in over night. Both the buy and sell step would have happened that morning.
    – Ukko
    Mar 18 '20 at 15:25
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    @cds333 Someone put an order in before the market opened to sell, and someone put an order in to buy. Those orders were matched immediately once the market opened. Mar 18 '20 at 17:30

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