The inside market is the best bid and the best ask. These two prices often give a very good idea of the current price of a stock. These two numbers, together, offer an alternative to the common practice of just listing the price of the last print.
One advantage of looking at the inside market is that you can see the spread. This gives you some idea of just how precise you can really be when you quote a price. If you just use the last print price, you can fool yourself into believing that a formula can tell you more than it really can.
Another reason we like the inside market is because it is real. Someone is willing to buy the stock at one price, and someone is willing to sell it at another. When you see an individual print, that could mean anything. There may be just one print at the high price of the day, and 10,000 traders staring at the chart, wishing they had sold there. That print was just a fantasy.
The inside market also offers a predictive quality. For a stock to trade, two people have to agree on a price. The inside market shows the first half of that, before the second person comes in.
The inside market is also relatively stable. The price of the last print can vary a lot, for no good reason. In order for the inside market to move, a lot of traders all have to change their prices, and there can be no new traders can be willing to fill in.
In general we use the inside market to validate a lot of our short term alerts, including the ones listed below. For the longer term alerts we use statistical analysis to aggregate large numbers of prints.
We offer the following alert types which are related to this topic. Click on the icon for a detailed description of the alert, or click on the example link for additional samples of each type of alert.