What averages should we use to trade with? I use the 10 and 18. Should I use just one or which two should I use? (November 20, 2000)
A lot depends upon what the stock you are looking at is doing. Stocks in uptrends tend to use the 10 or the 18 day moving average as support on the moves. Stocks do not move higher in straight lines. They move up, pullback to support, and then move up again. When in this pattern, the 10 and 18 day moving averages can be very useful trading signals. Some stocks use their 10 day moving average, others use their 18 day moving average. Take a look at the recent history of a stock. What is it using as support for the next move up in the uptrend? With each stock we cover, if we feel it is going to use a particular moving average as support, we note that. Sometimes we see a stock that uses its 10 day MVA as closing support will tap its 18 day MVA intraday. If we see that pattern, we can enter at either point, but we want to see the move up occurring, i.e., we want to see the stock hit that level and start back up. In other words, make sure the stock has bounced up off of that level and is not just going to plow right through it. If everything remains the same, the stock will most likely continue to use that level as support. Again, however, with this market, see the bounce.
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