The Trend

The Trend

Using EMA Ribbons to identify strength.
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One of the great things about EMA ribbons is their ability to help identify changes in trend. When EMA ribbons consolidate together it usually means the trend is changing direction, or we are in for some sideways action. Here are some 6 month charts with 20 different EMAs ranging from 10 to 50. In the same order, they are color coded starting from light green, transitioning to yellow, then to red.

Looking at AGG we can see the EMAs are trading close together indicating consolidation with a lack of commitment in either direction.





On the S&P 500 I've circled the changes in trend direction, based on the EMA crossovers. Within the green circle you will notice how tightly the EMAs were braided together, just before prices broke out.





For the S&P 600 small caps you'll notice the same things, only I'll point out how liitle damage the EMAs have taken as of this moment.





For EFA I've circled the previous EMA crossover back in late January. You may notice the same thing is happening now.





Compared to all the other EMA ribbons, the dollar looks to be the healthiest on the 6 month charts.




Sorry for the blurry pictures, when I add more colors it tends to ramp up the file size, exceeding the forum's size limit. For those of you who may be interested in throwing some of your own symbols over an EMA ribbon, feel free to click here.


Good luck and stay nimbal out there, the 1st week of May tends to get rough....Jason

 

[XL-entLady]

EMA crossovers are becoming my favorite tool in the toolbox. Excellent visual showing what you can learn from them!

 

[CrabClaw]

Thanks Jason, that was good!

 

[danvee]

Very interesting; first time I've seen that particular technical view

 

[FireWeatherMet]

Interesting stuff JTH.
When I saw the panic drop the S&P down towards the 50 day EMA I jumped out of the G fund and went 100% into the S and C. I felt reassured when I checked recent IFT's to see yours along with the quote of "Others rush out...I run in".:cheesy: I like to consider you the "smart money" and when I make a plan of attack that ends up matching yours or some others on this site, it makes me feel like I'm learning this game.

I think todays slight downward to sideways action seems to indicate that jumping in during the panic was the right move...as investors today seem to be slowly applying the brakes and realizing that the world won't end tomorrow on something that may or may not happen months from now. Would tentatively expect tomorrow to be an up day...and if Fridays jobs report comes in as good as analysts think...that could be a nice kick upward. This is all contingent on Fridays Greece bailout deadline being met though, as we seem to be in an atmosphere where Euro news trumps US economic data.

Question...are you thinking a short 3-6 day play on this, or are you thinking we can get back to our recent highs or beyond by months end?