With so many stocks out there and so many things going on in your day sometimes you may feel it is impossible to keep up with the market. You have work and maybe can’t watch the market all day, it’s possible you’re in school, have the kids to pick up, you name it. Bottom line is you have a life outside of the market however you need to stay tuned in; especially when a big move is happening. How do you do that you may ask? Well I have one word for you “Alerts”. If you want to be the first one to the party of a big move and get in on day one at a reasonable price with a well defined stop loss, then you need to know how and when to set alerts.
Most brokers allow you to set alerts that come to your phone as a text or to an email address. If you are trading with an online broker that does not allow you to set alerts, then get rid of them and I’ll send you a referral link to the company I use. The alerts we are going to look at below are for the squeeze play, but you can set alerts for anything. For example I set alerts when stocks break above the upper Bollinger band coming out of a tight squeeze. I also set alerts for stocks that are channeling (If you don’t know what that is look at my former blog on spotting support & resistance 2/2/2012). You can also set alerts to catch stocks moving to the downside or to a price level you want to buy it at after a pull back.
I tweeted (follow me on twitter @brownreport) about this stock earlier today when I was alerted by text of the move above the upper Bollinger band on IBM and was able to get in on the early stages of this volatility expansion. So lets take a look at the chart.
so when setting alerts there are a few things you want to keep in mind. What does the set up look like? What will the alert tell me at XYZ price? In this picture of IBM it looks like a classic squeeze play (a pinch looking to pop). However we do not know if it will pop and if the stock will break to the upside or to the downside. Since the overall market is in an uptrend I was only concerned with the upside alert. I do not want to put money to work in this stock until it starts to move so I set the alert at a price ($195.50) that would let me know the price action broke above the upper Bollinger band and was on the move. The alert was set 4 days ago when I observed this stock in my scans. Today we are in the trade and on day one dollar one. We will just have to see how this one plays out, but I like the price and the early entry we got on this one. Just for fun I posted the chart of a stock below to give you an idea of the type of moves you can capture early if you get into the habit of setting alerts. There are plenty more where this one came from. Enjoy.