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Bollinger Band Position (BBP) reflects the location of the closing price relative to the upper and lower Bollinger Bands. The BBP score ranges from +100 to -100. +100 equals the upper Bollinger Band, while -100 equals the lower band. Readings above +100 indicate that the stock is above the upper Bollinger Band. Readings below -100 indicate that the stock is below the lower Bollinger Band. The first chart shows Lockheed Martin (LMT) with a BBP score of 132 after an upside breakout. The second chart shows VZ with a BBP score of -111 after a break down.
In addition to surging above the upper Bollinger Band, LMT also broke consolidation resistance by exceeding its August-September highs. This Bollinger Band break is a sign of strength. Conversely, VZ broke consolidation support by exceeding its August-September lows. This Bollinger Band break is a sign of weakness.
The Market Carpet can be set to identify big Bollinger Band breaks. Once in the Market Carpet, choose Bollinger Band Position in the drop down box. Click the delta box to set absolute mode. This is the box with the little triangle (Greek Delta). A white Delta box is set in absolute mode. A gray Delta box is set in change mode. The top 5 and bottom five stocks are displayed in the bottom right. Click on the stock names to see the chart pattern at the top and look for consolidation breaks.
The S&P Sector default shows all nine sectors. You can dig down into individual sectors by clicking the sector name. The Market Carpet below focuses on the materials sector. Now we see the top and bottom five stocks within the materials sector. As a testament to sector strength, only one stock has a negative Bollinger Band Position score (Monsanto with -54.4).
In addition to looking for individual stocks that are breaking their Bollinger Bands, Bollinger Band Position can be used as a breadth indicator of sorts. A market or sector shows strength when more stocks are breaking their upper Bollinger Band. Conversely, a break below the lower Bollinger Band shows weakness. Each sector also has an aggregate score. The Materials and Energy sectors have Bollinger Band Position scores of 74.5, which are the highest of the nine sectors. These sectors also have the most, and darkest, green boxes. Again, this is a testament to relative strength.
