Category Archives: Bollinger Band Squeeze

Re: Bollinger Band Squeeze Experiment $INTC (UPDATE)

Nearly a month after I started this experiment, not much has happened with INTC.  We saw the price rise as high as $22.21, fall as low as $21.01 and finally ending the month at $21.86 for a profit of a whooping 11 cents!  Additionally, the Bollinger band has fallen back within the channel possibly setting up another breakout.  You can find the original experiment post here.

The premise of the experiment was finding a correlation between using Bollinger bands and Keltner channels.  Once the Bollinger bands were fully engulfed within the Keltner channel, a breakout of the Bollinger band from the channel and the according price action determines the direction of the stock price.  You can find a further explanation of the experiment here.

Bollinger Band Squeeze Experiment $INTC

Intel – INTC

January 27, INTC Bollinger band broke out of the Keltner channel with a positive MACD indicating a long position.

Re: Bollinger Band Squeeze Experiment $BIDU

It’s only been a few days into the experiment and this trade (short position) is already looking like it will end up a loss with BIDU finding support at it’s 50d ma and a rising accumulation line.  However, BIDU still has a narrowing Bollinger bandwidth which may mean this stock still hasn’t “settled down” and created a squeeze entry point yet.

I’m adding a new rule to My Rules of Investing.  Do not start a bearish position during a bullish market.  You’ll never win if you go against the large institutions that are moving the market.

Bollinger Band Squeeze Experiment $BIDU

Baidu, Inc – BIDU

December 16, 2010 both bands were inside the Keltner channel before they broke out under negative MACD indicating a short position.

It appears that most stocks break out of the channel and do a fake-out before continuing in their indicated direction.

I will add BIDU to my list of paper trades as a short sale.

Bollinger Band Squeeze Experiment $AKAM

This post is part of my ongoing experiment in testing the success of Bollinger band squeezes under imperfect setups.

Akamai Tech – AKAM

On January 10th, it may appear close, but the upper and lower Bollinger bands entered the Keltner channel near the six month low in Bollinger bandwidth before breaking out almost immediately after.

Ideally, both bands should break out of the Keltner channel, but in this case only the bottom band broke out with the upper still remaining inside the channel.

I’ll continue to monitor this stock for further progression after this imperfect squeeze setup.

Re: Bollinger Band Squeeze $CPO $ALB $CBE

After my recent post explaining Bollinger band squezzes, I’ve decided to list a few stocks that I believe are setting up great Bollinger band squezze plays.

Corn Products Intl Inc. – CPO

The only discrepancy I see with this stock is that although the lower Bollinger band is inside the channel, the upper band is still outside and never enters the Keltner channel.

Assuming the upper band did enter the channel and broke out in a similar place as the lower band did, we’d find the break out was under positive MACD so the trend would be long, not short.

I do like that the break out happen under greater than average and the volume on the recent down days has been less than the up days.

Albemarle Corp – ALB

ALB appears to be an ideal candidate for a Bollinger band squeeze play. Both bands are within the channel, bandwidth at a six month low, break out under heavy volume and a spike in the stocks accumulation.  However, the Jan 19th down was under the greatest volume this stock has seen in a while.

Cooper Industries Inc – CBE

Another flawed squeeze similar to the CPO play where the upper band does not enter the channel.  Also, the bandwidth is slightly off it’s six month low.  Another concern is the volume and distribution this stock has been experiencing lately.  I will still keep CBE in my watch list to see the long term effect that variables have on the Bollinger band squeeze strategy.

Please keep in mind that I am not invested in any of the above mentioned stocks nor have I actually proven the effectiveness of the squeeze strategy.  This strategy so far is in the early stages of testing it’s effectiveness.  I will keep you updated as to it’s results.

Using a Bollinger Band Squeeze to find long/short stock entry points.

I came across a new buying strategy today called the Bollinger band squeeze using Bollinger bands, Bollinger bandwidth, Keltner channels and MACD.  The brief research I’ve done using stock histories seems to make this a rather interesting way to find entry points into stocks regardless of going long or short.

This is a fairly simple chart to set up.  Using your favorite stock, overlay the Bollinger bands and Keltner channel while also adding the Bollinger bandwidth and MACD.

The Bollinger band squeeze strategy begins when the Bollinger bandwidth is at it’s lowest point in at least the last six months and the upper and lower Bollinger bands fall inside the Keltner channel.

The ideal entry point occurs with the Bollinger band breaks out of the Keltner channel.  At this point, the direction of the MACD is what signifies a long or short poistion.  If the MACD is positive then the entry should be a long position whereas a negative MACD indicates a short position.  However, use caution as some stocks may do a fake-out before continuing their upward movement.

To illustrate this example, I’ll use KBR Inc., ticker KBR.  Approximately September 30, 2010, KBR’s Bollinger bands fell inside the Keltner channel while simultaneously reaching a six month Bollinger bandwidth low (point 1).  On October 6 (point 2), KBR’s upper Bollinger band broke out of the upper Keltner channel with a positive MACD divergence.  Although KBR did do a fake-out, it repeated the Bollinger band squeeze a second time (point three) about three weeks later with a second fake-out before continuing higher for nearly a 20% gain in three months.

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