The TTM Squeeze is a powerful volatility indicator that identifies periods of low volatility and anticipates potential breakouts. However, it can sometimes also indicate periods of indecision and lack of conviction.
Pulling today’s results from Barchart’s investment ideas page, TTM Squeeze Triggered, highlights exactly this mood in the market. This list represents restricted candidates whose Bollinger Bands are compressed within their Keltner Bands.
The screen below filters the results to show only those stocks with an active options market. The results show a mix of sectors and industries just inside the top 10: semiconductors; software; oil, communications; automobiles; cybersecurity; and mining stocks.
But what I found particularly interesting is that their charts look eerily similar: that is, there is a recent high, a minor drawback, and a considerable period of consolidation.
Using Barchart’s TTM Squeeze chart template, the technical trader will also notice that many of these stocks are also trading at or below their intermediate exponential moving averages, such as the 34-day EMA.
This could indicate two potential outcomes. The broader market is waiting for a new catalyst to push prices out of the current range, and recent activity is leaning towards a move lower. However, assumptions are dangerous in trading and only a “trigger” of the TTM Squeeze indicator can confirm a new period of volatility (in other words, a directional move).
But what this indicator is currently telling me is that it is not yet time to commit new capital to the market, and sitting back might be the best trading plan right now.
– John Rowland, CMT, is a senior market strategist at Barchart and host of Market at closing.
As of the date of publication, Barchart Insights had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com