Weekend Strategy Review Part II – Sun, Feb 10th, 2013

by Hank Swiencinski, AIQ
TradingExpert Pro client for over 20 years, founder of ‘The Professor’s One
Minute Guide to Stock Management’.
AIQ will be hosting a full day seminar with ‘The
Professor’, March 9, 2013 in Orlando, FL. More info CLICK

Earlier this morning, I had some time to run a few algorithms that I don’t ordinarily check on a daily basis. With the Dow looking like it wants to test the all-time high this week, I was searching for clues that might tell me how high it could go IF the October 2007 highs were broken.

That’s pretty tough to tell at the moment, but I did notice something that could shed some light on the issue.
The past two weeks of sideways trading has served to develop all sorts of Blades on most of the stocks I watch. As a matter of fact, most of the stocks on the Member’s Watch List have this Pattern. But there’s something missing from most of them: Narrow Bollinger Bands.

There’s no toothpaste to squeeze out of the tube. As you recall from Class, one of the things that I like to see when I buy a stock is a Band Squeeze. When I see a stock pull back and develop the Blade of a Hockey Stick, I always look for a nice tight set of Bollinger Bands to form around the Blade.

Right now, I’m seeing a lot of positive Hockey Stick Patterns, but the Bands are anything but tight.

To give you an example of what I mean about ‘tight bands’, take a look at Wyndham Worldwide, WYN, last week’s Big winner. Notice how the Bollinger Bands tightened for 4 days just before the earnings announcement. That squeeze enabled the stock to pop 4 points. It was an easy trade if you placed a Buy Stop just above the recent high.

Same for CNI in early January. Look at the Band Squeeze. This is what enabled the stock pop and propel it to its target of 97.

But now, although I’m seeing a lot of stocks with HS Patterns, the Bands are a lot wider. This doesn’t mean that stock prices can’t push higher …they can, and most likely will. But they probably won’t pop higher. And pops are always a good sign for even higher prices.

Last week I told you how I plan to trade during the next few weeks as the market tests its old highs. I’m doing it mostly with stocks from the Honor Roll that have developed nice HS Patterns with tight bands.

On Friday, I highlighted a few of them for you. They included HERO, VALE, VRTX and SLV. I also added HPQ this weekend. On Friday, HERO moved past its recent high of 7 and triggered an entry.

The Bands on VALE, VRTX and HPQ remain tight as the HS Pattern continues to develop. If any of these stocks start to move above their recent ‘Blade Highs’,they could see a nice moves.

Same for the silver stocks and ETFs. This week, I will be watching SLV for a move above 31.41. IF SLV starts to pop, I’ll look to see if my favorite silver rabbit, Silver Wheaton, SLW, trades above 37.58. IF it does, I’ll do some initial buying, to be followed with additional Buy stops on the rest of the colony. Remember, we need to see silver pop here. With a BANG, not a whimper. If I’m correct about the wave count, silver should be ready to start a Major Wave 3 up. Wave 3s are impulse waves. They start with a BANG!!! And the tight Bollinger Bands could certainly help produce that initial BANG.

That’s what I’m doing,

All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.

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