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Monday, December 29, 2008

Free list of Bollinger Band Breakouts for Dec 26, 2008

As another byproduct of the Alert HQ process (read about Alert HQ) we have generated a list of stocks that have broken above either their upper Bollinger Band or below their lower Bollinger Band.

Bollinger Bands are a technical analysis tool invented by John Bollinger in the 1980s. They are an indicator that allows users to compare volatility and relative price levels over a period time. The indicator consists of three bands designed to encompass the majority of a security's price action.
  1. A simple moving average in the middle (we use a 20-day MA)
  2. An upper band (SMA plus 2 standard deviations)
  3. A lower band (SMA minus 2 standard deviations)
Many traders use them primarily to determine overbought and oversold levels, selling when price touches the upper Bollinger band and buying when it hits the lower Bollinger band. In range-bound markets, this technique works well, as prices travel between the two bands like balls bouncing off the walls of a racquetball court. This approach is supported by Bollinger himself, who also suggests using other indicators in combination with Bollinger Bands in order to confirm buy and sell decisions.

Bollinger also discusses another way of using the bands for trading. Closes outside the Bollinger Bands can be interpreted as continuation signals, not reversal signals. This approach has been the basis of some very successful volatility-breakout systems.

Today we offer a list of those stocks that closed above or below their respective upper or lower bands on Friday, Dec 26. Right click on the following link and save to your computer: TradeRadar Bollnger Band Breakouts

Those that closed above the upper band are labeled "Bullish Breakout." Conversely, those that closed below the lower band are labeled "Bearish Breakout."

As John Bollinger recommends, it is important to use other indicators to confirm whether the breakout is a continuation move or not. Or, as I always suggest with respect to Alert HQ signals, add a few of these to a watch list and see what happens.

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