; Moving average envelopes in the S&P
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Moving average envelopes in the S&P


For some time, analysts have used moving averages as indicators in different forms and levels of complexity. One innovation, offered by Murray Ruggiero Jr, writing for Futures, has used moving averages to create a window-of-opportunity envelope. The premise was the S&P often trade, beyond both a short-term (fast) and long-term (slow) moving average. Periodically, price retraces to fall in the envelope between those two averages. When it does, an opportunity arises for a breakout in the original direction, providing an excellent trade. The methodology employed is quite simple and all data and calculations can be easily maintained on a basic spreadsheet: 1. Each week record the open, high, low and close of the S&P 500 cash index. 2. Keep e simple three-week moving average of the trading range as the key range for the following week. 3. Simultaneously, maintain an eight-week and 50-week simple moving average of the S&P 500 cash index closing price.

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