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Tackle Today: The 20-day SMA

January 6, 2021

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This is a must-have for short-term traders

We are continuing our brief exploration of moving averages with a look at the popular 20-day simple moving average (SMA). Consider it the go-to benchmark for identifying the short-term trend. The strongest stocks will be rising above it. When prices fall below the 20-day, it’s not necessarily a trend reversal but a weakening of the trend.

Please note where the 20-day sits when analyzing the bull retracement patterns in our weekend Scouting Reports. Occasionally we’ll include an uptrending stock that’s pulled below the 20-day, but it’s not common. Most buy the dip opportunities will find buyers above or at the 20-day. It’s a hot spot for bulls to gather when waiting to join a trend.

It allows them a lower-risk entry on a stock that was recently too high to purchase.


Chart of the Day

Caterpillar Breakout

Caterpillar is breaking out on Wednesday.  It has been in a high base pattern, with the 20 SMA trending upward. It was also a candidate on this week’s options report.  Review the full report here: https://tackletrading.com/options-report-january-2nd-2021/

Video of the day

Analyzing DKS as a potential Covered Call

Coach Emily discusses a potential Covered Call trade in Tuesday’s Halftime Report in this video clip.

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Coaches Show Replay

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

Trade Masters 7:00 pm EST

Join us for a special webinar with the coaches where they’ll analyze some trade setups.

Tackle 25 MMG 8:30 pm EST

Join our monthly mastermind group for students of the STEP System.

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