The Smart Moving Average (trend line) was initially developed as a core component of the “Re-entry Rule” – the signal that tells us when it’s safe to get back into a stock that had been previously stopped out per the Health Indicator.

This trend indicator helped us distinguish good bounces off the bottom from bad ones. A “good” bounce follows through to the upside. A “bad” bounce fails and is soon followed by new lows.

The first thing to understand is that the Smart Moving Average is unique to every individual stock and index in our database. It isn’t a “one-size-fits-all” moving average like the popular 200-day or 50-day moving average.

It was engineered to be THE single best moving average at capturing bounces off the trend for any security, and it is based on the ever-changing volatility of the underlying stock.