Tuesday morning

Squeeze play - ACT

Here is one that looks like it's getting ready to pop to the upside.  (Of course it could come out the bottom instead but I'm a glass half full kind of guy.)  The Bollinger Band width is only 3.2% of the 20 day simple moving average.  (SMM alumni should remember 6% or less qualifies as a volatility squeeze.)  Volume has also been below average so that's due to change as well.  The fast stochastic is crossing the slow one now (daily chart) and at least 3 firms, including UBS, have targets of 150 or higher. Earnings were announced on July 25th and that resulted in the move above 130.

The Trade
If you want to nibble right here right now (assuming a flat to up open) that could work just fine.  If you start small you can keep a stop under the 50 day and have less 5% downside risk.  If the 155 target is reasonable (I think it is.) then the pay off is about 15% for a 3-to-1 reward vs risk ratio.  Once the position is started I would look to add on higher prices and above average volume.  As the position grows I would tighten the stop a bit to maintain that 5% (or less) risk profile.  If the price moves above the upper Bollinger Band this becomes a breakout from a volatility squeeze and y'all have seen that trade before but we can revisit it if we have lurkers who are unfamiliar with the technique.