Looking for a good methodology to set alerts for squeeze trades? Check out Transdigm (TDG) (September 14, 2018)


We are looking at Transdigm Group ( NYSE: TDG ) here; here’s why: You have to have a formula, you have got to have an approach that you can articulate. If you don’t you are not really making money you are just trading and there is a difference, trust me, there is a difference. I have done both, I prefer to make money by buying and selling socks; trading is a whole different thing.

I have a couple bones to pick with Transdigm ( NYSE: TDG ) in certain ways but I thought it was a good one to mention here. If you are looking at a stock like this and you see the other aerospace stocks, like Rockwell Collins ( NYSE: COL ), Raytheon ( NYSE: RTN ), I think Lockheed Martin ( NYSE: LMT ), Honeywell ( NYSE: HON ), they are all kind of doing okay; we could keep going but I am not going to,

We look back here at Transdigm ( NYSE: TDG ) and this has a lot of potential. Set a price alert here at $360.00, that is how you get into this type of trade, set a price alert at $360.00; this would be a breakout alert. If the stock trades above 360.00; boom, hey, look at this. It is almost like you have a trading assistant. And you tell your trading assistant. “Hey man, the stock is trading down here, I don’t want to look at it, I’ve got other stuff to do; my kid’s birthday is coming up. We’re going on vacation; I’ve got a lot to do I don’t want to look at this darn thing. But if the stock starts trading above $360.00 then definitely let me know.”

So you set your price alert and then, boom, you get your alert when the stock is at 360.00 rather than 370.00. You get the alert, you look and see what’s happening with the stock and, actually, first thing in the morning the stock broke out and then it hovered there. So there was actually plenty of time to buy this stock at the 360.00 level.

Now a lot of times with price alerts, you set a price alert at 360.00, right? So you’ve got your price alert at 360.00, the stock gaps up here and your alert gets hit. It trades down here and then moves up without you and you never get a chance to get on board and you feel kind of stupid.

But here, the stock runs up out of a tight squeeze here on a 5-minute chart, gives you your price alert and then fritters around here for an hour and a half or so before finally moving higher again. So this is an instance where your analysis works. You are looking at the stock; you are deciding what you are going to do when the stock breaks to a new high, to 360.00 out of this squeeze, and you are setting up your new parameters so that you will have time to act. So this is a good trade that could be made or could have been made.

Now, is it too late to buy this stock now? You know what? Actually, I don’t think so, but who knows? I am doing this on Friday night. We don’t know what is going to happen on Monday. But here’s what I do know: This is accumulation, this is institutional accumulation. We have had a couple green bars here, 2,3 green bars there that were heavier than average volume. Institutions are kind of nibbling on the stock. And then finally, on Friday, boom, a big move higher.

So there is buying behind this stock; I think it’s a stock that you can buy on any dip. If it happens to pull back, as long as it stays above 360.00, then I think you are good. As close as you can to this level here, which is kind of where your stop would be, this is really where ideally you would want to buy the stock. But as we see this now, I think if the stock starts trading above 370.00, you know what? Take some stock; just take some stock there. Keep a fairly tight stop, a few percentage points and then just ride the stock higher. Because if it stays above 370.00 you can bet that it is going to move above 378.00, which is really the last high.

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