As a trend following trader, I always trade in the direction of the long term trend. Doing so keeps me on the right side of the market most of the time and helps give me an edge.
I define the long term trend by using a 100 and 150 exponential moving average crossover. If the 100EMA is above the 150EMA, the trend is up. If the 100EMA is below the 150EMA, the trend is down. Following such a rule is simple, objective, unambiguous and emotionless.
Here are 4 different markets for which I have charted the long term trend. While these charts are not meant to be predictive (they are reactive), it is worth noting that a trend in motion does tend to stay in motion.
1) US Stocks:
The chart above displays the long term trend for the ETF SPY going back to 1996. As I have mentioned numerous times throughout this blog, the trend is up, which is why I have continuously been buying stocks.
2) The Japanese Yen:
Another market that I am keeping an eye on is the Yen. From both a purely trend following perspective and also from a classical technical analysis perspective, the Yen appears bearish to me.
3) US Government Bonds
The long term trend for bonds turned down last summer and remains in a downtrend today. As fellow chartist Olivier Tischendorf astutely points out, this could be the beginning of a mega-trend.
4) Silver
The price of silver has surprised many by falling 60% from its high, but had one followed the pure price action of the metal, one would have avoided a great deal of financial pain. And just because silver has already fallen 60% does not meant it cannot fall another 60% - a trend in motion tends to stay in motion.
