EMA Strategy

The bottom-line is that the market’s primary trend is down, which is based on the EMA Strategy.  As long as the 15-week EMA remains below the 40-week EMA, downward trend will remain in force. 

I know many of you are looking at the market since October 4 and are wondering if the bears have lost their nerve.  The majority of market pundits on CNBC and Fox Business are saying the worse is over.  This reminds me of my conversation many, many years ago that I had with the late Robert Edwards, who with John McGee wrote the bible on technical analysis, entitled “Technical Analysis of Stock Trends.”  I was doing my thesis on technical analysis for the completion of my MBA at the Zicklin School of Business, CUNY Baruch College.  My question to Mr. Edwards was how do you handle the daily financial and global news that goes into making investment decisions.   His response was: “always be objective.”  He went on to explain that once he had identified the primary trend of the market, say bearish, he only focused on bearish news.  That is, only focus on reason why the market is suppose to go down.  And, if the trend were up, he would focus on only reasons why the market should go up.  Also, he indicated that he never read the current edition of the Wall Street Journal.  He would save them for the week and read them over the weekend.  I asked, of course, why?  And, he responded that he always wants to be as objective as possible.  He said that we all bring our own biases for why the market should behave the way we think it should behave.  Therefore, he did not want his own biases to influence his investment judgment.  His focus was entirely on listening to what the market was saying, not the Wall Street Journal.  He also indicated that when he charts, he would do so in a “blind format.”  That is, not knowing the chart names.  Why?  He wanted to be as objective as possible and not being influenced by his own biases in regard to the company he was analyzing. 

Therefore, my advice, which was gained many years ago from Robert Edwards, is to simply focus on all the reasons why this market should being going down, because we know that the primary trend is bearish.  Forgot about all that noise from those “Bulltarts.”  As a matter of fact, don’t watch Bloomberg News, CNBC, or Fox Business.  Simply focus on what the EMA Strategy is saying!