Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Global Banking: Some Sectors Look as "Precarious as Ever" - 28th Oct 20
Silver Price Minor Dip Possible Before 2nd Major Upleg Starts - 28th Oct 20
�� How to Carve a Simple and Scary Pumpkin Face for Covid Halloween 2020 �� - 28th Oct 20
Gold Price One Last Dip Likely Then Major Upleg to New Highs - 28th Oct 20
Smart Money Is Going All-In On This New Gold Frontier - 28th Oct 20
Gold Stocks Still Correcting - 27th Oct 20
Gold and Crypto: Is This How Charts Look Before A Monetary Collapse? - 27th Oct 20
Silver's Coming Double Trigger Shotgun Price Explosion - 27th Oct 20
The $126 Billion Gold Opportunity in Australia - 27th Oct 20
Tips to Breeze through Your Spanish Classes Online - 27th Oct 20
Try The “Compounding Capital Gains” Strategy Today - 26th Oct 20
UK Coronavirus Broken Test and Trace System, 5 Days for Covid-19 Results! - 26th Oct 20
How the Coronavirus is Exacerbating Global Inequality, Hunger - 26th Oct 20
The Top Gold Stock for 2021 - 26th Oct 20
Corporate Earnings Season: Here's What Stock Investors Need to Know - 25th Oct 20
�� Halloween 2020 TESCO Supermarkes Shoppers Covid Panic Buying! �� - 25th Oct 20
Three Unstoppable Forces Set to Drive Silver Prices - 25th Oct 20
Car Insurance And Insurance Claims and Options - 25th Oct 20
Best Pressure Washer Review - Karcher K7 Full Control Unboxing - 25th Oct 20
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Most Overlooked “Buy” Signal in the Stock Market

Stock-Markets / Stock Markets 2015 Jan 27, 2015 - 04:59 PM GMT

By: Investment_U


Editorial Note: With the Dow opening at a loss of 285 points, today’s featured article couldn’t have been timed better. Below, Matthew Carr shares his favorite metric for determining whether a market is a “Buy” or “Sell.” We hope you’re able to put this information to good use.

The markets are flashing red.

Your palms are starting to sweat.

Should you sell? Should you buy?

Is this the bottom? Or the beginning of the end?

For investors, these are the questions we are confronted with. It’s not a game. Our futures - our retirements - are at stake.

That’s why we’re always looking for an advantage. A telltale signal. Something that can tell us whether a stock is a “Buy” or a “Sell.” Whether we should plow into the market or wait for a pullback.

Or simply hit the eject button.

There are a ton of indicators you could use... A parade of technical gauges that traders proclaim have the magic formula for predicting when to get in and when to get out.

In my previous job as a researcher for one of the nation’s top global energy publications, I was trained to use many of these gauges, with the goal of forecasting day-ahead prices for commodities.

It’s what allows me to tell you this secret.

If you’re intimate with the data - if you spend your days compiling trades at various points - and you have an accurate weather forecast, you can predict the short-term moves of commodities with a great deal of accuracy.

That’s because no matter how fancy a technical tool might be, they are all ultimately based on the same thing: human psychology and emotion.

You can sum it up like this...

When things are going well, they have to turn bad. And when things are going badly, they can only get so bad before they turn good again.

We all get that nervous feeling in our guts when things are going a little too well - for too long - in our lives. We end up looking over our shoulder, wondering when the shoe is going to drop.

Yin and yang. Contrary forces that are complimentary, always striving for balance... That’s the most basic explanation of technical indicators.

Over the years, I’ve boiled the technical side of my analysis down to a few very simple pieces. Including one that is often overlooked and ignored - my “Buy” signal.

Moving On Up

You’re probably familiar with moving averages. These are just average close prices over a set period of time.

The most popular are the 50-day moving average and the 200-day moving average. They’re the two most touted technical signals, providing resistance (top) or support (bottom) for shares of a company or an index.

They’re also considered the most important. Because as these two averages interact with one another, you get two very different and very popular indicators: The Golden Cross and The Death Cross.

The Golden Cross is when the 50-day moving average of a stock rises above the 200-day moving average. It’s a bullish sign. Shares of that company will almost certainly move up.

The Death Cross is when the 50-day moving average falls below the 200-day moving average. It’s a bearish sign. Shares of that company will likely continue to move lower.

During a pullback or a sell-off, these are two of the levels that are eyed the most closely...

Though their significance, especially when compared to other less popular moving averages, can be debated - which is what I’m going to do now.

The Third Wheel

Let’s look at the S&P 500 for the past two years. And we’ll include the 50-day moving average and the 200-day moving average...

On the far right of the chart - this month - we see the 50-day moving average trying to provide some support. It did the same thing in the middle of 2014 (notice how it rides the line as support again).

The S&P 500 bounced off it a few times in 2013 as well.

The 200-day moving average, meanwhile, is “correction” level. The S&P 500 dipped below this on its way to a 10% correction in October of last year. But other than that, the metric isn’t that key.

Now, let’s throw in an average that’s often overlooked but has been far more relevant to the S&P for the last two years: the 100-day moving average.

When we add this in, we get a true support line.

Since June 2013, the 100-day moving average level has marked the bottom of nearly every pullback and sell-off. Including the last three violent pullbacks in January and December.

The only one it didn’t capture was the 10% correction in October. But intuition told us that we were going to get a 10% correction because we’d already seen one that year from the Nasdaq, biotechs and the Russell 2000.

Plus we had oil plummeting and third quarter earnings on the horizon. We needed a shakeout.

Nonetheless, this 100-day moving average has been our “Buy” level in my Emerging Trends Trader research service.

Every time the S&P has pulled back to this level, we’ve looked to add to our portfolio. Because nine times in the last two years, this level has been our area of support.

But what about other indexes?

Well, let’s use those same three moving averages and take a peek at the Nasdaq for the past two years.

It hasn’t been as significant to the Nasdaq as it has to the S&P 500. But again, the last three pullbacks all bottomed out at the 100-day moving average.

And just like the S&P 500, the 50-day moving average provided support in 2013, while the 100-day moving average provided support for any more significant pullbacks.

The Nasdaq had a fairly volatile 2014, but the 100-day moving average is our near-term support level.

In other words, it’s a good “Buy” signal from this index, since it shows we’re at or near the bottom of a pullback.

Over the past couple months I’ve written extensively  that January is not the great month for stocks many proclaim it to be. For example, it’s the third worst month of the year for the Russell 2000. And the fourth worst month for the Dow.

January is notoriously full of volatility and down days - a perception normally reserved for September and October.

But we play - and profit from - this volatility by targeting the 100-day moving average. This has consistently been our signal that a bottom has been reached.

Now, a lot of critics of all forms of technical analysis will claim this is all just a self-fulfilling prophecy... and that’s completely true. That’s also the beauty of it. Technical analysis gives rules to a system that is complex... that has billions of shifting variables each and every day.

You can choose to ignore it or you can add it to your arsenal. Doing the latter will help give you some direction on days when you’re asking yourself, “Do I buy? Or do I sell?”

Good investing,



Copyright © 1999 - 2015 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email:

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules