Why not use the exponential 20 day MVA versus the exponential 18 day MVA? I hear a lot of services speak about the power of the 20 day MVA, but the first time I have encountered the 18 day MVA is on your site. I have no disagreement on the power of the 50 day simple moving average and the 200 day simple moving average. But, I am curious as to how you decided on the 18 exponential moving average versus others such as the more widely touted 20 day exponential MVA. (March 21, 2002)
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.
|Previous Page||Next Page|