How do you know when a stock or index will use the 10 day MVA or 18 day MVA? Especially in this strong run up? Do you play the 10 and see if it holds? Or do you go for the 18 day?

The stronger the move to the upside, the more a stock uses its 10 day MVA as near term support. As we teach in the online seminars, what we often see in a rally is that a stock breaks out of a pattern, and then tests the move, usually back to the pivot point or 18 day MVA, and then it starts to run up, testing either the 10 day MVA or the 18 day MVA when it does pullback. We often see a stock hold the 10 day MVA on the close while testing the 18 day MVA intraday. Still, it depends upon the stock. QLGC tends to hold the 10 day MVA as it did on this move higher. The neat thing is, we don’t have to guess at it. Stocks tend to make 4 runs or bounces up off of the short term moving averages when making a strong run before they pullback for a further consolidation, usually to the next support level and that is often the 50 day MVA. We can see the first move, let it come back to that level, and then pick them up on the bounce. That is the beauty of stocks: they give you more than one chance to buy. That is why we cringe when we hear those mutual fund managers say you have to stay invested all the time so you don’t miss that first 20% move in the indexes. Well, if you followed that advice, you would have riddent the Nasdaq down 70% in order to catch a smaller 25% upside move.