Don't Underestimate The Power of the Moving Average.

Whether you are investing or trading, the moving averages can help you pick the right stocks to get into at the right time. Whether you are looking at the Overall market, a particular industry or sector, or the individual stock itself, the MA can help determine the overall direction of where the a stock will go. Typically a professional trader typically will use four different MAs. On a daily chart, I use these MAs:

1. 13 EMA
2. 20 SMA
3. 50 SMA
4. 200 SMA

EMA stands for Exponential Moving Average, and SMA stands for Simple Moving Average.

Now depending on which way the general market is going, determines if i am going long or short.

For shorting stock in a bear market, the ideal MA pattern is as follows:

Downtrending 200 SMA > Downtrending 50 SMA > Downtrending 20 SMA > Downtrending 13 EMA > downtrending stock itself.

For going long on stock in bull market, the ideal MA pattern is as follows:

Uptrending stock itself > Uptrending 13 EMA > Uptrending 20 SMA > Uptrending 50 SMA > Uptrending 200 SMA

this technical analysis indicator is best used when the market, sector and individual stock compliment each other.