Have you heard the term “power hour” when it comes to trading and investing? Power hour refers to the last hour in the trading day, between 3 p.m. and 4 p.m. EST, and it’s when we can see some of the best moves of the sessions. That has investors wondering what kind of power hour stocks they should be watching — and how exactly to go about it. 

There’s about two to three hours of the trading day where the action is the most robust: the first and last 60 to 90 minutes of the session. While obviously something can happen in between, the most action tends to come in those two periods. 

Let’s look at five things investors should watch for when it comes to power hour stocks. 

Power Hour Stocks: 1. Earnings

Earnings are a huge mover for stocks, so it’s no surprise that this group can play a huge role during power hour. While it may seem obvious, there are two main “earnings” times to focus on when it comes to the last hour of the day. 

First, is the stock fresh off an earnings report from the prior session’s close or before the current session’s open? Or does the stock report after the close or in the following morning? 

These two events would help explain some odd, fast or volatile moves in the stock price as it approaches close. Either investors are reacting to what the company reported or they’re positioning ahead of what it’s about to report. 

2. High-Volume Leaders, Daily Gainers and Losers

Look for the day’s high-volume leaders. Oftentimes these companies will be the ones that reported earnings. However, all sorts of catalysts can lead to high-volume days in certain stocks. 

Perhaps it’s an oil stock as crude prices are moving aggressively (either up or down). Maybe its infrastructure stocks on the move due to a new bill out of Washington. Whatever the reason, these stocks are often a good place to start when looking for potential power hour stocks to focus on. 

Daily gainers and daily losers are also good stocks to look at going into the final 90 minutes of the day. All of these can be found with standard scanning programs with almost any online broker. 

3. Economic News

Another focus for power hour stocks? Economic news. However, there is a big caveat for this: Most economic news is in the morning. 

We don’t need to be economists to understand the data points, but it helps to know the important ones. Perhaps the most important data point is the non-farm payrolls report, typically released on the first Friday of each month. 

This can create some odd price action in the last hour of trading on the preceding Thursday, as investors position themselves ahead of the event. 

Other economic readings can have a big impact too — like the GDP report — but most of these will be released in the morning. However, that can set the tone for the day and ultimately, have an impact into the close. 

4. Fed Days

The Federal Reserve isn’t an economic reading, but if it were, it would have the largest impact. When the Federal Reserve releases its meeting reports — known more casually as Fed Days — we can see plenty of volatility. 

The committee releases its report, called the FOMC Minutes, a few weeks after its meeting. The release is typically on a Wednesday at 2 p.m. EST. That’s followed by commentary from the Fed chairman, who also tends to speak the next day. 

As a result, the last few hours of these sessions tend to be very volatile. Because the Fed impacts so many markets, volatility can spread quickly across stocks, interest rates, bonds and gold. 

Use caution on these days. 

5. Options and Options Expirations

Last, but certainly not least, are options. Options can have a huge impact on stocks, particularly in the final hour of trading. 

How do options impact power hour stocks? Well, while this exact situation is rare, consider GameStop (NYSE:GME). When traders, speculators and investors were piling into GameStop call options, market makers were focused to buy stock (in order to cover their short options). 

This creates an upward squeeze in the stock price and can kickstart drastic rallies in the stock. 

Typically though, options are used more as a tool for “flow,” or where the money is flowing. Traders want to see where big players are placing their bets in the options markets, particularly in the last hour or so of trading. That can help tip their hand to a potentially larger move into the close or in the next few sessions. 

Further, don’t forget about options expiration. Whether it’s Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) or virtually any other stock, options expiration can help move the needle on power hour stocks, particularly on Fridays. 

Lastly, don’t forget about quadruple witching days. While they only occur four times a year — on the third Friday in March, June, September and December — it’s a culmination of multiple options and futures contracts expiring and can create a lot of choppy price action and frustrating volatility, particularly in the last hour of trading. 

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.