The markets have been extremely volatile, and we’re heading into the end of summer…

… and looking to September, there are catalysts that can potentially give us a clear direction.

However, there are a lot of questions in the air:

 

  1. What will Trump tweet next?
  2. Will China continue to push back?
  3. Is a recession imminent in 2020?

 

The big one for us… will markets continue to stay range-bound until these are answered?

We can’t know that for sure, but most likely yes

What you might not know is that August and September have been some of the worst-performing months of the year, historically.

With the number of market-moving issues unresolved, what do we do and how do we trade with confidence?

I’m going to show you how to use one of the tools I constantly rely on to find direction in my trades.

 

Moving Average Crossovers Might Be The Solution

 

One of the most popular trading tools is the moving average… and one that I tend to use a lot.

The best thing about moving average crosses?

They’re a great way to identify the direction… before it happens.

As you can see in the chart below… the moving averages are all crossed down.

What’s a “cross”? 

Simply put, it’s when a faster (shorter timeframe) moving average crosses over a slower (longer timeframe) moving average.

In the chart below I have added the 5 moving averages I use in my Pinball setup. You can get more details here

For simplicity, let’s focus on the 8-day exponential moving average (EMA) (red line) and the 34-day EMA (yellow dotted line).

As we can see, all of the faster moving averages are below the slower. 8 below 20, below 34, below 50, below 200. I start with that.

When I see the stock price make a bottom formation, I look for the price to start trading above the 8 EMA.

Once we see that… it’s the first signal that the shorter-term moving average could cross above the longer-term EMA.

What that means is there is potential for bullish trading.

 

 

As you can see in the chart above, the 8 EMA (red line) crossed above the 20 EMA (yellow line).

Now, just because we see a cross… that doesn’t necessarily we can see a reversal in trend. In fact, when I’m looking to trade off this indicator, I like to wait for confirmation.

How do I know exactly when to get into a stock exhibiting a moving average cross over?

Well, I wait until the price closes above the 8 EMA.

Once we see that, we would look to buy the next trading day if the stock price stays above that level.

The beauty of using moving averages is the fact we can use those to spot areas where we can take profits.

For the most part, I like to take profits around the 34 EMA because that tends to be a resistance level – an area where the stock has a tough time breaking above… and more times than not, the safe thing to do is lock in profits when the stock reaches there.

Now, look at the chart below… this chart shows what happened after we saw the cross.

 

 

As you can see, the green circle is where we bought in, and just two days later the stock price hit the 34 EMA for a profit of  7-10% depending on your execution.

This is one of many setups I use to find great returns in any market… and you can find out the details of my strategy right here and how you can use it to your advantage.

 

[Important Note]

 

I have been alerting everyone to a Very Exciting and All New Strategy developed by our very own Kyle Dennis, the $7 million man…

When markets are unclear… OPTIONS are a safe bet…

How does it all work?

Kyle’s proprietary technology searches for unusual options activity… WHY?

Unusual options activity tells us that someone “in the know” and they could be placing trades based on non-public information.

You see, these “insiders” are rarely wrong. Dollar Ace uses this insight and allows you to be on the right side of explosive moves.

Check this out…

SOMEONE bought $345,548 worth of puts on Friday, August 23rd with expiration on the 26th.

That’s an OUTRAGEOUS bet.

Seriously, just think about that. Nearly $350,000 and only 1 day for it to make a move.

The same day, China announces $75B in new tariffs on US goods and the markets PLUMMET!

 

 

Those options contracts made a 300+ % move in favor of this informed bet. Wouldn’t you want to legally follow the insiders and know about these moves before they happen?

Now you can… and let me say… 300% is not unusual in this strategy…

But you don’t have to take my word for it…

Check it out for yourself.

 

Follow Raging Bull: