While the EMA crossovers offer an unambiguous way to determine the trend, there are other nuances that are useful in refining trend assessment. (Editor's Note: The moving average combinations chosen are not “magic bullets.” They are effective for DecisionPoint Trend Analysis, but other combinations could also be used similarly.)

In 2011 there was enough volatility to cause a downside crossover, which was followed quickly by another upside crossover. Another upside crossover followed in late 2009. In early 2008, there was another downside crossover, which identified the beginning of another bear market even worse than the one before it. The trend then changed to bearish as the 6-EMA crossed down through the 10-EMA, where it remained for over two years during the worst bear market in decades, finally crossing up again in spring 2003. Note how the 6-EMA crossed above the 10-EMA at the end of 1994, signaling the beginning of a new long-term bullish trend that lasted until late 2000. It doesn't always work this perfectly, but overall it is very effective in correctly identifying the trend. The 20-year period below is a perfect example of how well this methodology can work. The trend is bullish when the 6-EMA is above the 10-EMA and bearish when it is below. Look at the monthly chart (each data point represents one month) where a 6-EMA and 10-EMA (6-month and 10-month periods) are used. A “fast” and “slow” MA are used the fast MA is calculated on fewer periods and will respond to price changes faster than the slow MA. The long-term trend uses a Moving Average crossover signal on a weekly or monthly chart.

In other words, the longer-term trend determines the strategic stance, but the shorter-term is where tactical moves are made. The longer-term trend is the dominant and most important trend, but the shorter-term trends can be where long-term trend changes can first be detected. short-term could be hours to days), but it is important to always be aware of the trend in three consecutive timeframes because they are interrelated, and actions must consider all three. These are broad definitions and can be shifted down into shorter timeframes (i.e. In fact, during a strong bull market, over 90% of stocks can be trending upward together, which means our odds of picking a winning stock are nine out of ten.ĭecisionPoint Trend Analysis focuses on three timeframes – short-term (days to weeks), intermediate-term (weeks to months) or long-term (months to years). The reason for this is that the trend of the market normally indicates the direction of most stocks and sectors. The trend is the observable direction of the market – up, down, or sideways – and a person who acts in concert with the market trend can significantly increase their odds of success.

200 ema and 50 ema