Traders should apply Bollanger bands. As they narrow, volatility is narrowing. This is
usually a prelude to a bigger move. Option buying is a good idea when volatlity starts
to return after a period of narrowing... Often the first move is a feint in the opposite
direction that the market will really makes its bigger move in. That was true in October
2005.
Especially when this happens, look for a flat topped breakout. Buy the breakout.
Disregard the Red Sell from a Stochastic based system. The Stochastic system
works great when the stock or index is caught in a trading range, but works
poorly when there is breakout up or down.
