Are you 200 EMA Market Timers Ready?

[TWiley]

Could be this month ....

[SpiralHawk]

1. Please sir, may I have a clue?

Somehow I missed out on making any money this incarnation, and consequently am a clueless dweeb when it comes to financial acronyms. EMA? WTF?

[TWiley]

2. Exponential Moving Average - EMA

Exponential Moving Average - EMA

A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. The exponential moving average is also known as "exponentially weighted moving average".

Investopedia explains Exponential Moving Average - EMA

This type of moving average reacts faster to recent price changes than a simple moving average. The 12- and 26-day EMAs are the most popular short-term averages, and they are used to create indicators like the moving average convergence divergence (MACD) and the percentage price oscillator (PPO). In general, the 50- and 200-day EMAs are used as signals of long-term trends.

link: http://www.investopedia.com/terms/e/ema.asp

In short, there is a large and unassociated group of investors who use moving averages to determine when it is time to buy or sell stocks, mutual funds, or bonds. They call this type of chart "technical analysis". Those who are skeptical of this methodology call it bunk that is akin to reading the entrails of a sacrificed ox.

The redeeming point here is that there is a substantial amount of investors who are sitting with cash on the sidelines, and are waiting for these moving averages to cross. I think most would agree that sidelined money becomes fuel for economic recovery when injected into the capital markets.

The facts are that nobody holds a crystal ball and can predict market movemnts accurately 100% of the time. However, the market does respond to economic reports, investor sentiment, and maybe even moving averages.

My view is that if enough people believe it to be true, (which I believe is the case) then it may also carry the weight to effect the anticipated change. A self-fulfilling prophecy of sorts.

Time will tell ......

Butt, it looks possible that the "magic cross" could happen soon.

[SpiralHawk]

3. Thank you ultra much, TW

But all the same, I am going stick with reading ox entrails.

[Stinky The Clown]

9. OX ENTRAILS???????? You damned big money elitists ...... feh!

I can barely afford chicken entrails. In fact, I've taken to using my slingshot to bag sparrows to use **their** entrails.

[slipslidingaway]

4. The equity markets have had a great run the past two months

so I would be cautious now JMHO.

From the beginning of March...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5197347&mesg_id=5197347


FWIW people can see the EMA's at this link using "studies" under the tools menu and plugging in the correct period.

http://www.prophet.net/analyze/javacharts.jsp

[TWiley]

5. Thanks for the charting link. n/t

[slipslidingaway]

7. YW, I've noticed that sometimes their candles are not accurate

but they have data going back to 1900 and you can easily zoom in on area, say to check the EMA crossover in this case.

Also you can do a percent chart for certain periods, for instance since the low on 3/6/09 the SPX is up about 36% while the TRAN is up over 50%.

Some people are looking at the wedge type formation over the last 2 months, if it does breakdown I would look at retracement levels, horizontal support, the apex of the old sym. triangle, which for now is about a 25% retracement from the low.

http://www.decisionpoint.com/ChartSpotliteFiles/090508_aw.html

"HOWEVER, "virtually guaranteed" is not the same as 100% guaranteed -- I have seen ascending wedges that resolved to the up side."

http://www.mypivots.com/calculators/fibonacci-calculator.aspx

[slipslidingaway]

12. Picture of the old sym triangle referenced above...

http://www.decisionpoint.com/ChartSpotliteFiles/090227_lows.html

TA does not work 100% of the time and nobody is correct all the time, best one can do is use all tools available, adopt a plan but be ready to alter the plan.


http://www.baresearch.com/education/technical_analysis/chart_patterns/continuation/symmetrical_triangle.php

http://www.baresearch.com/education/technical_analysis/chart_patterns/continuation/rising_wedge.php

[taught_me_patience]

6. Technical analysis is shit

proven over and over again to be pure bunk. I guess there is a sucker born every minute, though...

[TWiley]

8. You could be right.

But, if enough investors make decisions based on it, then what do you suppose will happen when the lines cross?

I sense that you are a buy-and-hold investor. How has that worked out for you?

[slipslidingaway]

11. Big money entering or exiting the market leaves footprints IMO

one can choose to try and read them in the charts or ignore them.

:shrug:

[taught_me_patience]

13. Please google weak form market efficiency

http://en.wikipedia.org/wiki/Efficient_market_hypothesis

I am a mix of buy and hold and an options trader. I buy and hold etfs. I short stocks that I'm confident will go bankrupt. I like to write covered calls for income. Over the past 3 years, I've handily beat the sp500. It's probably mostly luck, though.

[Old Michigander]

10. Moving Average #2

I notice that your chart uses a 36 day ema for the shorter term ma. Where does this come from. Usually you see a 50 day ema for this. Can you provide some illumination on this point? Is this what some pros use? My dialectical analysis recently failed me and I now need to make some big money to recoup my losses.