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This composite calculates the ratio of stocks trading above their upper Bollinger band to stocks trading below their lower Bollinger band.
The number of stocks trading above/below their upper/lower Bollinger band is computed by comparing the close price to the 20-bar "BbandsUpper"/"BbandsLower" function.
A value of 60 tells us that among stocks trading outside their Bollinger bands, 60% are trading above the upper band.
Interpretation:
- Above 50: There are more stocks above their upper band than stocks below their lower band. This is a bullish signal. Contrarian traders may see this as a bearish signal if the value stays high for long period.
- Below 50: There are fewer stocks above their upper band than stocks below their lower band. This is a bearish signal. Contrarian traders may see this as a bullish signal if the value stays low for an extended period.
- Near 50: Market neutral. The number of stocks above/below upper/lower Bollinger band is the same.
Related Composites: Number of Stocks Above Upper Bollinger Bands: It counts, for each bar, the number of securities trading above upper Bollinger band. Keltner Channel Market Composite: It calculates a volatility ratio index similar to one created by this market indicator. However, it is use the Keltner Channel indicator instead of the Bollinger Bands. The Keltner Channel is a technical analysis indicator created by Chester W. Keltner. It can be downloaded here: Keltner Channel.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
