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The Chartman

Volatility Key to Picking Stock Plays

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I thought I’d change things around a bit, and show some stocks that I’m always looking to add to my portfolio, and when exactly I start buying.

But first, the market, and this week we finally saw the breakout we’ve been waiting for.  And – whew! – it was to the upside.  The weak volume on breakout day didn’t thrill me, so I’m hoping the upside holds.  For now, though, it’s tough to be a bear.

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First up on my “favorites” list is Netflix (NASDAQ:NFLX).  Not a day goes by where I don’t watch something on it (currently, “Orange is the new Black”), so I’m on the lookout for good entry points.

The key, though, is to look at a stock’s volatility and buy on a dip that is appropriate for the stock. NFLX is a wild one, and the stock regularly dives 25% or more before rebounding.  Look to get in on that next dip.

Verizon (NYSE:VZ) is another favorite and I’m sure most of you use it like I do. This stock doesn’t move as much as NFLX, so a 7% pullback is the right drop to look for.

Back next week and we’ll see if the breakout held.

What do you think?

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