Why is it important to watch for pre-market moves?

Stocks that move pre-market indicate there is potential for further volatility during the rest of the day. As a momentum trader, this is what we look for. One type of play on gap-ups in price is to watch if the stock holds its price without any strong sell-offs. If so, upwards movement is likely to continue throughout the day. Another type of popular play is a strong gap-down in price. This is more common on news such as drug trial failure for biotech stocks. On gap-downs of 80% or more, a bounce is very likely in the near-term.