The 10-Month SMA (simple moving average) is a moving average that is created by taking all of a stock’s 1-Month Prices over a trailing 10-Month period. The 10-Month SMA is a long-term moving average trend line that aids our team in assessing a stock’s current trend. Our team uses the 10-Month SMA in tandem with the 1-Month Price to serve as a Buy/Sell trend indicator. The 10-Month SMA serves as the “trigger” line and the 1-Month Price functions to signal whether the current trend is either a ‘Buy’ or a ‘Sell’. If a stock’s 1-Month Price is trading above the 10-Month SMA, this signals a ‘Buy’. If a stock’s 1-Month Price is trading below the 10-Month SMA, this signals a ‘Sell’. Once either a ‘Buy’ or ‘Sell’ signal is generated, as long as the 1-Month Price remains on that side of the 10-Month SMA the trend signal is still intact.

For example, if a stock’s 1-Month Price finishes a month trading above the 10-Month SMA, this generates a new ‘Buy’ signal. Every consecutive month after this that the stock’s 1-Month price continues to remain above the 10-Month SMA signals a continuation of the ‘Buy’ signal and bullish trend. Because of this the stock can be purchased.

Thanks,

Chuck Hughes