By the end of yesterday’s session, my two moving averages (13 sma and 34 sma) were intertwining and moving sideways, showing the lack of any trend. That’s one of the reasons I keep these simple calculations on each of my charts. Compare the first 5 1/2 hour non-trend with the last hour surprise.

When Moving Averages Don't Move

During a trend, a pair of moving averages (of almost any length) will pull apart and come together as the market breathes. Impulse — retracement, far apart — close together, buy — take profits. But as indecision enters the market the moving averages tangle, and remind the trader that strong trends are the exception, not the rule.

This morning I watched price cross back and forth across the pair of averages, each pulse or pullback smaller than the last. It reminded me of the morning trading hours before an important Fed meeting. It also reminded me that sometimes markets will quickly set a high and low point, and then oscillate in smaller and smaller gyrations until the session close.

With this type of movement, it’s easy to get bored and miss a breakout on the few occasions it happens. Today was one of those days. There was actually a good entry on the pullback to the short moving average just before 12:30. While I was surfing the Internet. I’ll just remind myself of something I heard trader Don Miller say a number of years ago. “I don’t take trades during the last hour on Friday. If I made a dumb mistake then, I’d regret it all weekend.” Sure Don — it was only five points.

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