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Over my decades in the business, I've heard all the negatives and disbeliefs about technical analysis.
In general, investors fail to believe that this valuable tool will help them generate returns that beat not only the market, but also a lot of the Wall Street analysts.
Bottom line is that ignoring the technicals not only misses precious opportunities, but can also cost you lucrative returns, especially in a market like this one.
Despite all the doubts, even the most elementary investors are using technical analysis when they murmur the phrase "the trend is your friend." Furthermore, they're applying it to their investment approach when buying or holding stocks that trend higher.
Of course, as a true technical analyst, I need to quantify the term, not just say it to make myself feel good.
That said, the most widely watched – and somewhat accepted – technical indicator out there is the 50-day moving average. This, folks… is the trend that you should consider your friend.
Right now, the S&P 500 is fooling around with ticking off its friend.
About the Author
Chris Johnson is a quant - he's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.
Chris also contributes to Money Morning as the Quant Analysis Specialist.