Blog Posts Tagged with Range Expansion

A Look Back at the Signals Which Launched EVR's 40+ Percent Rally...

The other day I was flipping through charts on the top percentage gainers scan and noticed the run EVR has had over the last three months.  It's pretty much been straight up (more than 40%) since late October.

CLCD: Another Range Expansion-Contraction-Expansion Trade

As another example of how I'm using this SwingTradeBot to find and track good trades, here's one I closed out today: CLCD.

I posted CLCD to my chart notes  the night of September 8th after I noticed it on my Calm After Storm scan.  (See my blog post about the Calm After Storm scan for my reasoning for creating that scan.)  This is a textbook example of the kind of chart I wanted to find when I dreamed up that scan.  CLCD made a huge move on the 6th, pulled back on the 7th and on the 8th started showing signs of stabilizing/consolidating. That's what triggered the Calm After Storm.  

Introducing the 'Calm After the Storm' Stock Scan

A few days ago I added a new scan which I'd been thinking about for a while. This scan was motivated by a somewhat tedious process I do almost daily during earnings season. I like to find stocks which have had a strong positive initial post-earnings response and then sell off a bit before rebounding. In order find those stocks I would look at the Earnings Movers scan for each of the previous 5 days or so. I would quickly look at those charts (using the hover charts feature) and then more closely inspect any stocks that were setting up to my liking.

The recent action in Shopify (SHOP) is a great example of the type of action I'm trying to find. I happened to catch SHOP setting up intraday on February 19th and I bought some when I saw it rebounding from the lows of the day. Here's the chart:

As you can see SHOP gapped up after earnings on the 17th and sold off the rest of the day (a gap & trap). It continued to sell off the next day and closed the gap from the previous day. (Closing the gap isn't a requirement but in this case I took it as a plus.) The action on the 19th (an open narrow-range candlestick after two long/tall dark/closed candlesticks) gave me confidence that the selling was over and that SHOP *might* try to mount a rebound back to the post-earnings high. This is a classic case of volatility swinging from high to low and (hopefully) back to high again. Obviously that trade worked out quite well -- I'm still holding SHOP today with approximately 30% gain.

I see this type of setup a lot but often not until after the rebound move is already underway. So I wanted to create a scan which would unearth these setups for me. That scan is what I'm calling the "Calm After Storm". Here's what it finds:

This is Why I Track Bollinger Band Squeezes (MBLY)

I often talk about how I like to use Bollinger Bands to catch range contraction-to-expansion moves. Just last week Mobileye made a nice move after being in a Bollinger Band Squeeze for a very short time. You can see on MBLY's recent events page that a Squeeze started on May 8th. As I've written before, John Bollinger has noted that you'll often see stocks in a squeeze tag one band and then reverse and shoot through the opposite band:

Traders beware! There is a trick to The Squeeze, an odd turning of the wheel that you need to be aware of, the head fake. Often as the end of a Squeeze nears, price will stage a short fake-out move, and then abruptly turn and surge in the direction of the emerging trend...

So MBLY had all the ingredients to do exactly what Mr. Bollinger laid out. MBLY's trend table page shows that it was trending up and then went trendless (according to ADX & Directional Movement) once the Squeeze began. Then it crossed the lower band and reversed to close back above the lower band and proceeded to launch above the upper band. That was such a strong move that it's now walking up the upper band, which is another classic thing that Mr. Bollinger has written about.

This is why I built the Bollinger Band alerts / scans into the site. I'm always checking the "Bollinger Band Squeeze Started", "Squeeze Plus Upper Band Touch" and "Squeeze Plus Lower Band Touch" scans for trading candidates.