Stock Market Video Analysis & 50 Day Moving Average Observations 7/9/10

A big part of successful trading is attained by going with the setups where the odds of trend continuation are most likely. A very simple tool to help us enhance the odds of a continued move is the direction of the 50 day moving average. Generally speaking, a rally with a declining 50 day moving average should be considered as a higher risk bounce candidate only, I refer to these stocks as “guilty until proven innocent.” They can be great trades, but longer term trends are not likely to stick until that widely watched moving average has at least flattened out. The video below takes a look at some examples of this with- $PCX $ACI $CROX $DECK $FTNT $GMCR $IBM $RVBD $SINA $MCP A stock which continues to trend higher with a declining 50 day moving average is not normal behavior ($HMSY), just as a stock which declines with a rising 50 day moving average should be considered “innocent until proven guilty” These are concepts I have repeated hundreds of times here and explained in detail in my book (link on right side.)