Prepared & presented by Marty Nohe January 2011 The Squeeze Play Prepared & presented by Marty Nohe January 2011

Disclaimer: If something bad happens as a result of action taken based upon information presented, it ain’t my fault and you can’t sue me! This “play” was devised by John Carter, a principal of Trade the Markets, Inc. via a 2-day seminar CD I purchased at a trade show.

The premise Using the Bollinger Bands and the Keltner Channels together, provides timing for entrance and exit positions on an intraday & swing trades Relies on premise that securities fluctuate between periods of high volatility, followed by low volatility

Bollinger Bands In the 1980s John Bollinger introduced to the market his use and interpretation of a mathematical presentation of volatility with an upper and lower band, usually imposed on a tick chart. During 2010 he introduced 3 new indicators, based upon his original work.

Sample 1 BB Chart

Reading Bollinger Bands When the bands are tight or closer together that is a period of low volatility, to be followed by higher volatility (higher price)

Ford-yesterday

Keltner Channels Overview Developed by Chester Keltner –a technical indicator *Uses 2 lines, like Bollinger Bands *Adapts to changes in a stocks volatility *Generates buy signal when price crosses above upper band and sell signal when price crosses lower band

Bank of America 1-28-11

Sample 2 Keltner Channel

Using both BB & KC Overlaying the BB over the KC is confirming that it is a “squeeze play” is valid Once the BB compresses inside the KC, as it begins to exit the channel that is the buy signal

Sample 1 BB and Keltner

Sample 2 BB & Keltner

Momentum Indicator This study measures velocity of price change for a fixed interval. It is measured by subtracting the price at the beginning of the interval from the latest price Buy signal when value starts to rise Sell when values start to decrease

Putting it together Graphic BB KC IMI 1

Putting it together Graphic BB KC IMI 2

Putting it together Graphic BB KC IMI 3

Settings Bollinger Bands 20 and 2 Keltner Chanel 20 and 1.5 Insert Zero line into momentum indicator 2 minute chart on directional days 5 minute chart on choppy days

Review & Conclusions Using these 3 studies in concert produces approximately 70% success rate according to statistics compiled by Trade the Markets Can be used any time, but unlike many methodolgies, it can be used during the “doldrums” part of the day (8:30-10:30 pac.)

Hints Enter the trade at the close of the candle only Exit ½ the position when the trend is cresting Watch the momentum Indicator to help when to get out of trade

Positive and False Readingsw

References/contacts John Carter: Trade the Markets www.tradethemarkets.com “Technical Analysis From A to Z” by Steven B. Achelis