The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about why ribbon studies can help alert you to market peaks and bottoms. I really actually like ribbon studies. I’m not a big fan necessarily of any one particular moving average or exponential moving average. And we’ve seen in our research before in the signals report that moving averages are not necessarily the best predictor of market trends or stock peaks and rallies. But I think when you actually combine multiple moving averages to create these ribbon studies which is effectively what a ribbon study is, is multiple moving averages overlaid on the same chart and it creates this rhythmic pattern of different ribbons or moving averages. When you overlay this on a chart, one thing I like looking at in particular with ribbon studies is how expanded the ribbons can get near market peaks and bumps. When you look at a ribbon study on a chart, if you see that all the moving averages are abo