Back in the day, I used to look at the weekly S&P 500 chart every weekend and ask myself the same three questions: What is the long-term trend? What is the medium-term trend? What is the short-term trend? My goal was to make sure that I was respecting the broader market direction, and not fighting it by taking too many contrary positions in my portfolio. I eventually realized through some trial and error that I could use a series of weekly exponential moving averages to get me to the same place, allowing me to spend more time focusing on what was coming next. The Construction of the Market Trend Model As I discussed with Mike Turner in a recent episode of the Market Misbehavior podcast, staying on the right side of market trends is arguably the most important role for any investor. I realized that by comparing the 21 and…
