As you know I tend to use the 50-day average a lot when it comes to charting and managing an overall uptrend as the 50 day tends to act as a trailing support zone when an issue or index is above it during pullbacks. However, there comes a time where markets get extended away from the 50-day average. That’s where shorter-term moving averages come into play. This past weekend in the premium newsletter I added those moving averages to the daily index charts and felt it was too good not to share with you people so here is an excerpt.
Keep in mind when dealing with the 10 and 20-day averages they are what I like to call moving averages for use in accelerated up trending markets. I’m not a big fan of using them as they tend to burn themselves out rather fast to the upside when an issue or the market turns which in turn makes them prone to breaks to the downside a lot faster than the 50-day average. Not to mention they tend to whipsaw one quite a bit (mostly the 10 day) and really don’t allow for that much wiggle room. Take a look at BOTZ here for a moment and you’ll see what I mean.
