Jared Levy, Editor, Option Strategies Weekly
Tuesday, 13 September 2011

I had a birthday over the weekend and I was fortunate enough to have my father travel 1,200 miles to be here with me. We caught up on so much… We learned more about each other even after all these years.

He’s extremely bright and always seemed to have the right answers growing up. One of the things I learned about my father this weekend is that he’s not as complicated as I thought he was. I always thought my father had some intricate process that took countless hours for every decision he made.

The reality is, many of the problems he faced came down to a simple, pragmatic decision-making process that allowed him to do what “felt” right. Sure he has been wrong from time to time, but overall he has managed to create a good life for himself without overthinking or overstressing over every last thing.

But there’s one thing he has been stressed about, and for good reason… The stock market.

Many “home gamers” (investors like you) often have difficulty finding the “trend” let alone timing the markets perfectly. We hear things like, “The trend is your friend,” and are expected to just know how to do that. (My father actually brought up that saying.)

But what the heck does that saying even mean and more importantly how in the world do you know what the trend even is at any given moment?

Quantifying Market Trends

Right now the only market trend seems to be confusion, which is not easy to follow and usually doesn’t make you any money.

Like my father, I try to reduce things to their simplest terms. Today, I am going to offer you three simple ways to spot a market trend. These three things will help guide you in your investment decisions.

It’s a super simple yet powerful system.

If you followed these guidelines in the Nasdaq 100 (NDX) over the past five years, you would have been up 153% as opposed to a buy-and-hold investor who would have been up barely 30% in the same time period.

Market trends come in different time frames. The guidelines I am going to show you today are for the longer-term investor. If you’re the type who buys and sells stocks in seconds, minutes, or in a day or two, these guidelines are not for you.

Those of you who hold positions for a month or more, you should see a dramatic change in your results.

Step One — Moving Averages

I have shown you the power of moving averages in the past. When you know what to look for, they can be powerful tools. Taking a quick glance at the moving averages will let you know if you are in a bullish or bearish trend.

The first step in determining market trends is to Read more