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How to Use the 50-day with Today's Top Stocks

Written By Brian Hicks

Posted February 28, 2011

We just recently sent this to Options Trading Coach readers… but we wanted to share it here, too.

We wanted to show you just how easy it is to spot buys not only with the R-4 Trigger, but with the 50-day SMA.

Take Netflix (NFLX) for example.

Netflix chart 022811 

First, notice that every time the stock hits the upper Bollinger Band coupled with an overbought read on Williams % Range, the stock reverses. The same thing happens at the lower Bollinger Bands, too. But there’s another way to spot trend reversals.

Follow the 50-day moving average.

For the last year, every time the stock pulled back to the 50-day, coupled with an oversold read on Williams % Range, the stock moved higher. It’s possible NFLX could reverse again, as it gets ready to hit that 50-day again coupled with an oversold read on MACD, RSI and W%R, but we’re waiting to see if it holds this time, too.

Same thing with Baidu (BIDU)…

Baidu chart 022811


And these are just two of many we run into every day.

The best part of trading with the 50-day moving averages… they’re very common.  Stay tuned for buying ideas with this indicator, too.