THE BIG IDEA
This week we are going to discuss how nothing can actually be something.
The first two days of this month saw most of your favorite indexes up more than 3%. Ever since, it has been a dull meandering market. Nothing is happening. And that is something to take notice of.
The nothingness can be visually (or statistically) represented by way of what technical analysts call a Bollinger band squeeze. So let’s start with Bollinger bands.
Bollinger bands create imaginary - and breakable! - boundaries based on the interplay of recent prices and their standard deviation. In a volatile market, the mathematical standard deviation gets bigger and so the bands around the current price get wider.
In a sleepy market like what we have now, the bands squeeze together.
When those bands get sufficiently narrow, traders know to be on the lookout for a swift and sharp break from the malaise. How narrow is narrow? As a rule of thumb, it is when the bands are at their narrowest in at least six months. However, nothing magical happens at precisely the six-month mark.
The chart below has two panels. The bottom one contains QQQ, the NASDAQ 100 ETF, along with its Bollinger bands. Above it is a plot of the Bollinger band width.
The bands are now at their narrowest since mid-March. Not quite six months but, eh, close enough. If nothing unusual happens on Monday, the bands will squeeze together even more as some older, more outlier-ish, data drops out of the calculation.
You will see something similar on charts for the S&P 500 and other market indexes.
The squeeze is powerful, but it’s not a cheat code. There are several traps that catch less experienced traders:
Direction is not guaranteed. A squeeze tells you higher volatility is coming, not whether it will be bullish or bearish.
Context is king. You will need to look at the big picture and whatever data/indicators you prefer to try to guess at where the market is more likely to go.
False starts happen. Price can poke outside the bands, snap back inside, and then break out in the opposite direction. Don’t overreact to the first move.
When the calendar flips to September, be prepared for some “volatility expansion”. The market could move further and faster than you expect.
SEEN ON THE INTERNETS
Few people succeed at day trading and a big reason for it is that most of the money is actually made overnight.
Using Micron Technology stock as an example, someone who posts on the Stocktwits website under the name Dividendology shows us the results from day trading versus “night trading”.
The same result happens, to some degree, for a wide range of stocks. It is especially strong for what the researchers cited by Dividendology describe as “high attention stocks”. Think Nvidia, Tesla, and most other actively traded names.
In his/her post, Dividendology gave a list of reasons why this would happen, some of which probably don’t hold any water. However, the main result is consistent with other research on the topic.
NUMBERS ONLY
44.4% | Last week’s AAII sentiment survey found 44.4% bears, the second-highest weekly number since the end of March. |
15 | The S&P 500 has 15 members which have doubled (or more) so far in 2026. Sandisk (SNDK) leads the way, up 525%. |
$108 billion | Nvidia’s internal forecast is for $108 billion in revenue (plus or minus 2%) for the current in-progress quarter. Their revenue for all of 2023 was $27 billion. |
SWINGEX INDEX
As of market close on: 28 August 2026
Swingy says: After a noisy week, the index has settled on zero. We'll wait for the smoke to clear to see a signal.
Learn more about how the Swingex Index works here.
WATCHER
Stocks highlighted here each week are not recommendations to buy or sell. They are provided as ideas for swing traders to follow up on with their own research.
NSIT (Insight Enterprises): This week we return to one of our favorite chart setups. This one is on the chart for Insight Enterprises, which is a “solutions and systems integrator” according to their website. In other words, they try make a company’s IT stuff play nice together.
The stock has been playing nice since mid-July. After a strong run on solid trading volume, NSIT has spent the last two weeks carving out a base for its next move.
So far, the chart has given us a cup. We’ll see if it spends a few days forming a handle. Either way, the usual direction of travel after a cup or cup-and-handle is to continue going up.
Based on the size and shape of the cup, you could look for a next stopping point in the $168-170 range.