Honestly, I can’t believe what I’m looking at.
Virtually every stock I’m watching is exhibiting the exact traits I’m looking for when seeking to put on new long positions, only the patterns are inverted 180 degrees.
Ok, I’d like to see the Bollinger Bands contract (a lot) more, but after the rather hot run from last week, I think things may settle down a bit here…so that may happen in due time.
Look at how the volume is contracting right through the trough (peak) of these curves. Also observe how the daily price ranges are tightening up. After many years I have found that these are consistently low risk, high reward trade setups (yes, to the long side).
Behold! MS Paint skills in all their glory:
$SINA: This one has already started to break down. Observing the inverted chart makes this move seem so obvious, to where I can’t believe I overlooked it. Declining volume and a lower daily range as it nestles right up against the moving averages.
$CBS: How could you let Gus Johnson get away? Another nice looking one here.
There are 19 stocks that I’m watching (found in the Weekend Watchlist posts linked earlier). All are exhibiting some form of the same general pattern with different proximity to the moving averages and the recent relative low.
I’m going to look to start short sale positions in all of the above on any weakness. My stops will be pretty obvious.
More on this situation as it develops. You can follow me on Stocktwits to receive updates.