One of the things we always do is watch our indicators of stock market action. Not just what they are saying about the market, but also whether what they are saying is worth anything. What I mean is we look to see if the indicator is helping forecast movements up or down. If we see it is starting to lose its effectiveness, we look to see if anything else is working in its place. While much of analysis does not change because it is driven by human emotion that has remained unchanged since the beginning, what the big money uses to make its moves can and does change. That can happen with moving averages. Sometimes the simple 50 day MVA works better than the exponential 50 day MVA for a particular stock. It used to be that most all technical analysts used the simple 50 day MVA, but with more volatility we started to see the exponential 50 day MVA act as support. Same with the 18 versus 20 day MVA. We started to notice during the last of the big bull run stocks in uptrends would use the 18 day MVA as their support on their trends higher. If we waited for it to test the 20 day MVA to make a move, we would never get in. We still see the 18 day MVA working today as well. We always look at the 20 day and compare simple to exponential on the shorter term MVA’s as well. We look to see what is working, and that is what we use.
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