The Simplified Story of Current Markets

Sometimes it can be tough to pull ourselves out from a long string of day to day analysis and choppy price action.

It’s times like these where I’ll hide the individual noisy candlesticks and simply plot my favorite moving averages to gain some perspective.

This view, always depicts a much more objective story in my mind.

The blue line is the 8EMA and the yellow the 20EMA in the following charts.

The $SPY is the only one of the following 3 indices that is still bearishly aligned (8EMA below 20EMA) and it’s been that way since September 9th.

spy_9_27

We can note though, how flat both averages are, which indicates overall chop and lack of momentum. This also means control (momentum) is up for the taking.

$IWM shows a different story, one of control by the bulls.

iwm_9_27

Notice we did get that bearish cross lower around the same time as $SPY (September 13th) but look how quickly buyers stepped in and drove us higher. We’re not at new highs yet, but there is relative strength here.

Finally the $QQQs which tell a story of momentum.

qqq_9_27

Once again, we did get a bearish cross in early September, but it barely held for a couple of days before buyers stepped in and drove us to new highs. The $QQQs continue to demonstrate leadership.

I wrote more about the application of moving averages in this post and if you would like to learn more about how we trade markets, check out this page.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 20+ years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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