Understanding Price Trends and Moving Averages

A moving average does not predict the future. What it does is far more useful: it tells you, without noise or emotion, whether a stock is in a sustained uptrend, a downtrend, or going nowhere.

Why This Matters

Price trends exist because institutions — mutual funds, pension funds, insurance companies — cannot build or exit large positions in a single day. Their buying and selling occurs over weeks and months, creating sustained directional price movement that is visible in the form of price trends. Moving averages are simply tools for distinguishing genuine trends from random short-term fluctuations. They are not magic — they are mathematics applied to the visible footprint of large institutional activity.