Over the years, technicians have found two problems with the
simple moving average. The first problem lies in the time frame
of the moving average (MA). Most technical analysts believe that
price action, the opening or closing stock price, is not enough
on which to depend for properly predicting buy or sell signals
of the MA's crossover action. To solve this problem, analysts
now assign more weight to the most recent price data by using
the exponentially smoothed moving average (EMA). (Learn more in
Exploring The Exponentially Weighed Moving Average.)  An Example
For example, using a 10-day MA, an analyst would take the
closing price of the 10th day and multiply this number by 10,
the ninth day by nine, the eighth day by eight and so on to the
first of the MA. Once the total has been determined, the analyst
would then divide the number by the addition of the multipliers.
If you add the multipliers of the 10-day MA example, the number
is 55. This indicator is known as the linearly weighted moving
average. (For