The idea was to quantify our Squeeze Indicator into a numerical score and present it in a format that lets us scan and filter our universe.
We used basic math to right-size all the Squeeze Indicators and adjust them for each stock's volatility.
We simply divide our Squeeze Indicator by the lowest contraction, using a 1-year lookback period. That gives us our relative squeeze score.
Since different stocks vary in beta and volatility, we normalized all the scores for an apples-to-apples comparison.
To do this, we divided our Squeeze Indicator by the standard 14-day Average True Range, or ATR. This gives us our normalized squeeze score.
Then, we multiply the normalized score and the relative score to arrive at our Squeeze Score, which is the value you will see in our Squeeze Engine.
Here’s what that looks like:
The higher the score, the tighter the coil.
We now have a quick and painless way to sort for stocks that offer the top squeeze opportunities.
At the end of the day, the Squeeze Score measures the level of volatility compression, with a higher score indicating greater compression.
However, what it doesn’t tell us is what direction we should expect volatility expansion to occur in.
It also doesn’t tell us when momentum is coming into the stock, signaling the start of an expansion phase.
But don’t worry, we are adding momentum and trend tools to the Squeeze Engine… and that update should be live in the coming days. More to come.
We are also adding a Long-Term Squeeze Score, which will be based on the weekly Squeeze Indicator, while the standard Squeeze Score is based on the daily.
This way members can easily spot setups that offer volatility compression across multiple timeframes.
We also have an options liquidity filter, so we can look only at stocks with options if we want. Just click the filter icon and make sure that “BOx Universe Only” is checked.
The Squeeze Engine automatically populates with live data on a 10-minute delay.
Now get in there and see what kinds of stocks are coiled up and ready to pop!
Our goal with the Squeeze Engine is to empower members who come in and learn the Breakout Multiplier method to trade it on their own.
I want to provide you with all the tools you need to fully leverage this system and take your trading to the next level.
The Squeeze Engine does just that. Think of it like a loaded gun. You just have to aim and shoot.
In this quick tutorial, I walk through how I use the Squeeze Engine— all the way from idea generation to trade execution.
