One example can be seen in the chart above: while the 10-day line is well above the 30-day, volume fell – an indication that the market wasn’t convinced that there was an uptrend.
This strategy differs from how we manage money. We let each sector, asset class and global region identify its own trend and when something crosses above its 200-day moving average, we consider that the time to buy.
With regard to volatility, there’s nothing magical about the 200-day moving average. If the markets are rocking and rolling, you can consider the 50-day moving average. Bear in mind that it will be more sensitive to movements and it could mean you’ll be trading more.
Some might find a 10- or 30-day moving average is a bit too short-term for their tastes. It would require much more discipline, and for the average investor, it wouldn’t work.