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Dear Netters,
As I already mentioned in this list, if there is one indicator that even
the most radical fundamentalist respects, it is the 200 period
moving average (200 MA).
Indeed, this one indicator has such a huge following that it
becomes important to take it into consideration.
First look at the Dow Jones Industrials average: during most of
august the 200 MA provided support. When it was broken prices
immediatly sunk. Now, the DJ INDU is testing it as a resistance.
More amazing is what happend with the S&P 500 index. The
support 200 MA provided during most of august has been broken.
The 200 MA line then provided a powerful resistance during late
september and is now being tested again. This is an amazingly
beautiful textbook quality example of technical analysis!
For both Microsoft and IBM, the 200 MA provided support and has
not been broken, which means both hardware and software are
apparently in shape!
I do not think that the 200 MA has any magical powers attached to
it, but the charts clearly indicate that they have an enormous and
powerful following.
And when that happens, one can always explore this situation
since it cannot be easily arbitraged away.
Alfredo
L
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