There’s a certain pattern famous traders like to look for.
And it has to do with contraction.
They like to see a stock’s range get smaller and smaller and smaller.
Why?
Because each contraction means more energy is being stored up for an explosion.
It’s the calm before the storm.
Considering how dazed and confused the market has been lately, it makes sense that some stocks are seeing their ranges squeeze down as they wait indecisively for the moment to launch upward.
Vmware (VMW) is one of those stocks.
As you can see, it’s been trading in a tighter range over the past several months.
When it does this, it looks like a megaphone. Thus the name.
But all it means is that a stock has gathered up a bunch of energy it wants to release.
And a break above $127 could be the moment VMW announces its move to the world.
Using a megaphone, of course.
Happy trading,
Scott
