Sunday, May 24, 2009

Stock Market - Which Way Will It Go?



Above is a daily chart of the NYSE Composite and as you can see the market is struggling to break through its 200 day moving average as well as the year high which was made last January. A move below last week's low would be bearish and would suggest lower prices. On the flip side, if the market can push through the year high and 200 day moving average, that would indicate that the bulls are in control of this market. As always, we'll let the market tell us which way it wants to go by letting stocks breakout of this month's range.

6 comments:

Anonymous said...

Hi Kevin, great post as always.

I notice you often look at 200D MA instead of the usual 240D MA. Any special reason for that?

Kevin said...

Why would anyone look at the 240 day moving average? The popular avgs are the 20, 50, 100 and 200 day. Its important to watch the averages that everyone is looking at so that you can get a clue as to what most traders are thinking and doing.

Anonymous said...

kevin,

do you prefer a regular moving average or exponential? and why?

thanks for the great posts every week

Anonymous said...

Kevin if you were asked to guess , is this a bear market rally or the beginings of a new bull market ?

Chris said...

OK, how about this 200 DMA question then. I have seen a couple quality technical guys favoring the 200 EMA over the SMA. Personally, I have always used the SMA. Any thoughts on this?

Thanks again for your posts...very helpful.

Kevin said...

First let me say that there is no right or wrong in technical analysis...it all comes down to what works for you. Having said that I'll answer all of your questions.

I prefer to use simple moving averages rather than exponential. All I'm looking to do is to average prices over the last 50 or 200 bars...I'm not looking to add any extra weight to the most recent data which exponential averages do. I keep it simple and use simple moving averages.


My guess is that this is a bear market rally but I need to see the market prove me right before I begin shorting. So far the trend is up.

Chris, I use the simple 200 day moving average too. I always use simple.

DISCLAIMER

This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Trading and investing involves high levels of risk. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.
 
Google
Technorati Profile Finance Blogs - Blog Top Sites