Six Squeezes Lined Up Like Dominoes

Trade of the Day Wake-Up Watchlist

"Look, I don't care what these guys do for a living. I'm looking at the chart, and the chart is telling me a story."

Nate Bear, Lead Technical Tactician, Monument Traders Alliance

Nate Bear

I've been scrolling through some charts this morning and SRE just jumped out at me.

That's Sempra, for those of you keeping track.

Now look, I don't really care what these guys do for a living.

Something about energy infrastructure in California and Texas - natural gas, electric, whatever.

I'm not here to read their annual report or analyze their business model. That's just not how I roll. I'm looking at the chart, and the chart is telling me a story.

Here's what's got me excited:

 

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SRE doesn't just have a daily squeeze - this thing has squeezes across the board. I'm talking six different time frames here, gang. Daily, 195 minute, all the way down to the 5 minute.

Now for those of you who are new, let me explain what a squeeze is.

Think of it like a coiled spring - it's what happens when volatility gets compressed.

The Bollinger Bands contract inside the Keltner Channels, and when that happens, the stock is basically getting ready to make a big move in one direction or another. It's like pressure building up that eventually has to release.

When you see squeezes stacked up like this across multiple time frames, it's like having six coiled springs ready to pop at the same time.

That's when you can get some really explosive moves.

But wait, there's more:

The EMAs on this thing are beautifully stacked too. For you newer folks, EMAs are exponential moving averages - they're like trend lines that show you which direction the stock is moving.

When they're "stacked," it means the shorter-term ones are sitting above the longer-term ones, all lined up like little soldiers marching in the same direction.

On SRE, I'm seeing the 9, 21, and 50 EMAs all stacked bullishly on both the daily and weekly charts.

This tells me the trend is healthy and pointing higher. When you get pullbacks in a setup like this, they usually bounce right off those EMAs like a trampoline.

Now here's the thing about the timing:

SRE has earnings coming out in the first week of November. And while I do like to play runups into earnings, this isn't a fast enough mover for me to do that, which is why I'm willing to wait until after they announce.

Let them report their numbers, see how the market reacts, and THEN decide if you want to play it. If SRE reports good numbers and starts moving higher, and those squeezes start firing green?

That's your confirmation that this thing wants to go.

If it reports crappy numbers and sells off? Well, then I just saved myself from losing money on a bad trade. You with me?

Your Action Plan

Wait for earnings to pass. If SRE shows itself to be an earnings winner and we start seeing those squeezes fire green across multiple time frames, then I will use this strategy to take advantage of the move.

The technical picture is pointing toward $95-100, maybe higher if it really gets going.

I'll keep you guys posted if I decide to pull the trigger.

Remember, we're looking for earnings winner first, then squeezes firing green with momentum behind it.

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