For those saying the 200DMA is a "magnet" pulling price down, consider early October. On the left side of the chart, we balanced for 5 days before pushing back above the 100DMA While I agree a bounce off the 200 would be sweet, calling it a "magnet" is misleading $ES_F $SPY
@gr8fultrading Right! 200 MAs are sort of self-fulfilling now I guess since everyone has them on their screens. A CD yielding 2% never touches its 200 MA. Why? It has no volatility, just a slope. So, a MA of any length is just a combination of its slope and its volatility.
@Bradlito1 I feel bad for traders who shorted based on tweets about imagined “magnetism”. If there were a force at work today it would be Vanna
@gr8fultrading Right. We have so many "Farmers Almanac" type market indicators. Of course, one can't force weather but one can certainly act on such things as MAs, what team wins the Super Bowl, etc. Then, toss in some seasonal tendencies and they all have some immeasurable effect.
@Bradlito1 “How does price react when it gets there?” is the right question, not “Which levels will we touch next?”
@gr8fultrading Yes re: your analogies. A security can dip down to its 200D MA with such suddenness and velocity that it'll plunge right through it. Its move's physics are real, the 200 MA is a figment. And, my mention of slope/volatility? It varies so much exposing "200's" arbitrariness.