I'm sure you've heard by now that I've been working on a new filter to find contracting Bollinger bands.
This is going to revolutionize my process in bringing you the best trade possible because now, with a single click, I can find all of the Bollinger Band contractions and find the directional bias to capitalize on the volatility moment that is about to happen.
If you missed it I released a report this week about how I used the Bollinger Bands and this software to trade the SPDR S&P Retail ETF (XRT), if you missed it you can get caught up by clicking right here.
I ran the filter again today and put together a list of ETFs along with the percentage of companies within the ETF that are about to experience a volatility moment thanks to the Bollinger Bands, this was the result.
On the Bullish side of things, the Nadaq 100 (NDX) and the software sectors have been positioned for a heavy dose of bullish action as traders have flocked to the relative strength performance.
Companies like Salesforce.com (CRM), Intuit (INTU), and Ansys (ANSS) are among the few breakout potential stocks in the group as technology stocks prepare to take the earnings stage next week.
and if you want to stay short on the market the metals, mining, and consumer discretionary sectors are starting to build a larger number of bearish trade setups as the sectors have been staying pretty quiet.
Volume and price movement have been lacking as the majority of market participants have been crowding into the relative strength-leading technology space.
My fear is that the crowded sector of the market will start to see selling this week, but for now, the real selling risk lies elsewhere.
Three companies I am eyeing as we head into the weekend are Alcoa (AA), U.S. Steel (X) and EBAY (EBAY). A bumpy start for the market next week could drop these stocks into a volatility storm that will accelerate their downside moves.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.