Getting the Most from Bollinger Bands By Bob Krishfield May 31, 2011

What’s a Bollinger Band? Bands plotted above & below Moving Average Indicate Volatility of Price Usually 20 DMA and 2 x Std Deviation Encompasses 95% of the distribution Less than 5% of points outside bands 95% 6/29/10

Why Bollinger Bands? Price Crossing into Upper Band indicates Strength, Crossing into Lower Band - Weakness Position In Band Indicates a Relative High or Low Narrowing of Bands Usually indicates a Change in Direction Price Walking Upper Band Top - Strong Trend in place %B Indicates overbought / oversold 6/29/10

An Aggregate Look Using %B %B Values Calculated for all Stocks in the SP500. Range of Values Divided into 12 Columns: < 0 0 - .1 .1 - .2 .2 - .3 .3 - .4 .4 - .5 .5 - .6 .6 - .7 .7 - .8 .8 - .9 .9 - 1 > 1 Each Stock’s %B Value Added to the Count for that Column This is Repeated for Each Day 6/29/10

Counting %B Levels - Mkt Breadth Count of Stocks in SP500 with %B at Various Levels 6/29/10

Counting %B Levels - Mkt Breadth Percent of Stocks in SP500 with %B at Various Levels 6/29/10

Extreme OverBought - Over 80% Stocks %B > 1.0 Japan Disaster Extreme OverBought - Over 80% Stocks %B > 1.0 Extreme Oversold - Over 80% Stocks %B < 0.0 6/29/10

Mar 2009 Bottom 6/29/10

Flash Crash 6/29/10

Conclusions Bollinger Bands on a Single Stock or Index are informative %B Counts of All Stocks in the Index Offers a High Definition view of How that Index is Positioned and Changing Extreme Positions Can be Identified Cause / Effect Relationships Using these are TBD. 6/29/10