Upside Explosion
When you get a contraction in the volatility of a stock, the reaction can
often be sharp when the volatility reverts to the mean. Combine this with a
pattern and a strong trend and you have the recipe for a potentially profitable
trade.
3-11-2002
13:37:55
Black and Decker (BDK)
is pulling back from its recent high. BDK is down 0.12 to 46.39 and is
holding a
3-month relative strength rank of 86 and and uptrending ADX of 51 from
TradingMarkets.com.
The narrow-range pullback, combined with a strong uptrend and
contracting volatility explodes to the upside today as the stretched rubber band
snaps back. BDK is up more than 3 points in Tuesday’s trading.
Putting the pieces together will help you discern which setups
are more likely to follow through. This is what we try to do here at
TradersWire Interactive, and with a
little practice you will soon be doing it for yourself as well.
Until tomorrow,