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THE BIG IDEA
Maybe it was just a summer daydream, but the other day I somehow went from thinking about the sequel of the Naked Gun to O.J. Simpson (known as The Juice back in his football days) to short squeezes to the Bollinger band “squeeze” setup to Tesla.
Bollinger bands have been around since the 1980s, when John Bollinger began demonstrating his then-unnamed technique on Financial News Network. In the ensuing years, Bollinger and others started coming up with other uses for his creation. One of those was “the squeeze”.
The basic idea behind it is that when a stock’s Bollinger bands are the narrowest they have been in at least six months, a big move in the share price is probably just around the corner.
As a review for some of you and to fill in the blanks for others, Bollinger bands expand and contract around a stock’s price as volatility in the shares rises and falls. You get narrower bands when volatility is low.
So, back in the day, analysts and traders would use Bollinger band width to identify stocks that had been unusually quiet. Chances are that those stocks would soon start making some noise. The narrowing of the bands does not say anything about the direction a stock would move, however. You would need to answer that question some other way.
You don’t hear much about the Bollinger band “squeeze” technique anymore. As the markets have evolved, the technique has lost some of its predictive power. It can still be a useful piece of information.
You might already be able to guess what all this has to do with Tesla. TSLA is nobody’s idea of a quiet stock. But the shares do currently meet the classical definition of a Bollinger band squeeze, as the bands are at their narrowest in at least six months. So TSLA is relatively quiet compared to its own history.
In this chart we see one year of price history for TSLA with Bollinger band width plotted below.
TSLA has been oscillating into a narrowing triangle. The Bollinger band width has likewise fallen to its lowest amount in at least a year. Will the stock fly higher or is a painful plunge in store?
SEEN ON THE INTERNETS
What we believe, we see.
That is true of many things in life, and the stock market is no exception. Last week, we found this post by Frank Cappelleri on social media. He didn’t give his own opinion about where he thought the market was headed, at least not in this post.
His point was you can see in the current chart what you want, to conform to whatever opinion you already had.
What do you see happening on the chart? Will there be a consolidation before heading higher? Or will last week’s rebound fail and lead to another selloff?
NUMBERS ONLY
8.3% | After a 5 week streak of bullish sentiment, bears outnumbered bulls by 8.3 percentage points in the latest AAII survey. |
6 | On Friday, only 6 more stocks in the S&P 500 made a new 52-week high (22) than a 52-week low (16). BTW, the index is a fraction of a point away from an all-time closing high. |
$704 billion | In the last 10 years, Apple has repurchased $704 billion of its own stock. |
SWINGEX INDEX
As of market close on 8 August 20250 |  |
Swingy says: The index is flat neutral and it is summertime. Time to relax with a cold beverage!
See some historical examples of the Swingex Index in action 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.
Planet Labs (PL): Similar to last week’s Watcher, we have another stock basing at a high level. There is a beautiful cup-and-handle pattern on this weekly chart, covering most of the first half of 2025. It broke out of that pattern in June and has been consolidating those gains for several weeks. If the market holds up, this one looks primed to go higher in the near future.