ABSTRACT
The Moving Average is a fascinating tool and has real value in showing the trend of an irregular series of figures more clearly. It also has value in the fact it can be used to cancel out the effect of any regular cyclical variation, such as a normal seasonal range of temperatures, to get a better picture of the true secular trend. One of the useful tools, and one of the first many students of market action adopt, is the trendline. Whether a stock is moving generally up or down or sideways, there seems to be a tendency for the Major Trend to persist. Shorter Moving Averages are more suitable for commodities. Nelson Freeburg took a Ned Davis Research Moving Average system and a 20-week Moving Average, added a filter, and produced a system that reportedly has 80% profitability on signals and generated returns in the 15% range going back to 1942.
