Over recent weeks I have heard many analysts and commentators both here in Australia and in the US talking about how a number of stocks, and market indices, are moving above their 200-day Moving Average (MA). (But do they use a Simple MA or a Exponential MA? I don't actually know.)

Have a look at the Price Chart shown here of the XJO (S&P/ASX 200) since late February, and showing the last market bottom on 6 March. The highest curve on this chart is a 200-day EMA. (You can click on the chart to see a larger version.) Notice that the price is now moving above the 200 day EMA.

It can be possible to get a feel for the bullishness of the market by looking at share prices compared to their longer-term MA (on price charts like this one). Some people use this observation (ie. price above long term MA) as a buy signal. And of course they look for confirmation from volume, or another indicator or a chart pattern.

But which long term MA should we look at? Above I said that some people say that 200 days is significant. But other commentators and analysts suggest different time periods. For example, Stan Weinstein in his book "Secrets for Profiting in Bull and Bear Markets" talks about a 30-week MA. He says that we should not buy a stock if the price is below the 30-week MA.

And in the AFR newspaper (Australian Financial Review), they publish charts using a 60-day MA in the Market Wrap section where they show charts for five stocks on one page, and several overseas indices on another page.

And you will find other experts who have a similarly different opinion about which time period is best to use.

To help us work out which of these might be best for us, we can use a Multiple Moving Average (MMA) with some key time periods, all on one chart. It could be useful to view a Daily chart and show a 200-day MA, and a 150-day MA (which is very close to Weinstein's 30-week MA), plus maybe a 90 day MA, and a 60 day MA.

If you are happy to have as many as 12 MA curves on your chart, then you can use the "Guppy Custom MA" in BullCharts, and enter your own time periods. You can customise it and save your preferred values as the Default values. To find this indicator in BullCharts, choose "Insert Indicator" from the menu (or Ctrl+I). In the Indicator dialogue box, in the "Category" drop-down, scroll all the way down the list until you find "Guppy, Daryl" toward the bottom (this drop-down groups the indicators, with authors towards the bottom). Then when Daryl Guppy's indicators are displayed, choose "Guppy Custom MA". On the right hand side of this dialogue box you can enter you own values.

However, if you don't want 12 MA curves, you can create your own indicator, and add it to your Indicator toolbar. This is explained in the next section.

It is easy to download someone else's BullCharts scan definition file, or custom indicator, and use it on another computer. This is because each indicator is stored on your computer's hard drive as a separate and unique file, and the file name is the same as the name you give to the indicator. You can email the file to someone, or download from a web site. The steps to download this one from the web are explained here.

Very briefly what we are doing is this: Copy the indicator file to the correct folder on your computer, then start BullCharts. It is that easy. When BullCharts starts, it checks all the custom folders / directories and notes what files are stored there.

• Firstly, if BullCharts is running, then shut it down.
• Right-click on the link below, and select "Save Link As..."
• If you are using Windows XP, then you need to save this file into the following directory: C:\Program Files\BullSystems\BullCharts\CustomIndicators\
• Now start BullCharts and it will be listed with other indicators.

More details on some of the topics in these Weekly Tip Sheets are included in Brainy's Monthly eNewsletters that are available to subscribers (for a very modest amount). Feel free to click on the relevant link at right to view samples and more details.

These weekly Tip Sheets for BullCharts* users are intended to be short, quick grabs of information. They are not a replacement for the monthly detailed Brainy's eNewsletter articles, which cover these same topics but in much more detail. The eNewsletters articles also cover Technical Analysis and Share Trading topics.

Also see the BullCharts on-line help (in BullCharts, hit the F1 key), and the relevant User Guide Chapter for more details (this is supplied with the software and copied to your hard drive as a PDF file).

Note: Any screen shots shown in this newsletter are snapped from BullCharts version 3.8.

FEEDBACK? - I am very keen to receive feedback about these weekly BullCharts Tipsheets. Please feel free to email me with comments, or suggestions. Contact details are included below.

* - BullCharts is: "...an innovative charting and technical analysis system. It provides a feature rich and powerful set of tools with access to the latest strategies from local and overseas authors in analysing the dynamics of the stock market."