The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines, Expanded Second Edition

Question 30—Value

Answer

1. C

2. A

3. B

If each price is a snapshot, then a moving average is a composite photograph, a reflection of value in the market. If you buy near the moving average, you’ll be buying value. If you buy below the EMA, you’ll buy undervalued assets. One of the very few scientifically proven facts about the markets is that prices oscillate above and below value. When you sell above the upper channel line, you sell overvalued assets.