Bollinger bands are often useful to help identify possible entry and exit points. When indices or individual equities are at the top end of their BB’s – and especially if they pierce through that top – it’s likely a good time to reduce exposure. And vice versa for when at the bottom end of their BB’s – and especially if they pierce through that bottom.
Currently, the S&P 500’s monthly bollinger bands have significantly widened after the market experienced outsized volatility earlier in the year. Right now, the upper bollinger band is roughly 3326 & the lower is 2549. So while we’re not there yet on the upside, the risk/reward using the upper and lower levels isn’t very attractive on the long side.
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