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Hi Clyde,
I wouldn't assume that prices would perform according to any assumption,
regardless of the sample size. In the event that I become convinced that
fading such a crossover has a high probability of profitability, then I'll
wait for a setup I like and pull the trigger. All I wanted to point out is
that it appears to warrant further investigation. There are different
combinations of MA to test, and I want to try them out in as many markets as
possible over as much data as possible before drawing any conclusions. But
it's at least worth a look, which is the only point I wanted to make.
In your S&P chart, it seems to me that a long term investor would be quite
happy with fading the downward crossover shown at the crash. At the time, I
yanked my money out of a mutual fund because I was rattled. Had I known more
at the time (about the fade, for instance), I'd have hung around and made
some money... : )
No assumptions ever, no conclusions yet. But using my criteria for entry, I
haven't found an outright loser yet when looking to fade the MA crossover.
Admittedly, there's a lot of backtesting to do - but it appears to me from
my limited sample that the backtesting is worth doing. What conclusions I
draw remain to be seen.
Regards,
Dennis C.
----- Original Message -----
From: Clyde Lee <clydelee@xxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Cc: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, May 14, 2000 10:38 PM
Subject: [RT] Re: Bearish MA Crossovers in Nasdaq chart
> One problem with such assumptions as was made in this
> post is the lack of looking back at all such MA crossovers.
>
> Just for kicks I have attached a similar crossover.
>
> Quite a spell -- price wise -- before a meaningful rally.
>
> DO NOT GET TRAPPED INTO SUCH A SIMPLE
> ANALYSIS AS A FACT.
>
> IT MAY BE BUT IT MAY NOT BE ! ! ! !
>
> Such assumptions may be hazardous to your health!!!!!
>
>
> Clyde
>
>
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> SYTECH Corporation email: <clydelee@xxxxxxx>
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> ----- Original Message -----
> From: "Dennis L. Conn" <dennisconn@xxxxxxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Cc: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Sunday, May 14, 2000 20:58
> Subject: [RT] Re: Bearish MA Crossovers in Nasdaq chart
>
>
> > Hi Joe & all,
> >
> > Gee, I actually thought I'd stumbled upon something new - I've been
> looking
> > at this multiple MA crossover phenomenon for a couple months now. My
> > comments are based on preliminary observations, but here's what I've
> noticed
> > that appears to warrant further investigation:
> >
> > J.F. - "There was an interesting article in Stock and Commodities back
> in
> > Feb 98. The title "Multipule Moving Avg. by Daryl Guppy. For short
> term
> > traders he used the averages of 3, 5, 8, 10, 12, 15 day EMA. Long
> term, 35,
> > 40, 45, 50, 60 EMA."
> >
> > D.C. - I'd been looking at a combination of 21, 34, 55, and 89 period
> EMA
> > regardless of trading timeframe (like Steve Karnish, I'm just crazy
> about
> > those Fib numbers). This seemed to yield better results on intraday
> charts
> > (much better using all session data). Just for kicks, today I looked
> at a
> > daily chart of the NASDAQ composite and tried a combination of simple
> moving
> > averages using the same period inputs. The simple MA combo seems to be
> more
> > accurate than the more sensitive EMA. But I think I use it differently
> than
> > the author in TASC...
> >
> > J.F. - "How to use it, fairly simple. When one group of EMA would
> bunch up
> > and start to cross the other group, you would know to go short or
> long."
> >
> > D.C. - Does this imply that if the MA crossover occurs in an upward
> > direction that it's time to start looking for a long entry? From what
> I've
> > observed, using my EMA combination, prices would be at new swing
> highs; once
> > the 21, 34, and 55 EMAs have all moved above the 89 EMA, I see prices
> > correct a bit and then hit one or two new highs before turning down
> for a
> > playable short (this minor correction should last for several periods
> before
> > going to a new high). Occasionally, a third high will be hit before a
> > worthwhile short play. But the short play is always more profitable
> than
> > going long on the crossover (of course, the opposite is true when the
> EMA
> > crossover happens in a downward direction). So I'm looking to fade the
> MA
> > crossover, as opposed to following along in it's direction. Of course,
> in a
> > parabolic move up, one could wait for hell to freeze over before
> finding a
> > correction and rally setup to fade the crossover. So there'd be a lot
> of
> > missed profit by not playing the MA direction - but since those
> parabolic
> > moves like to correct sharply, they're not something I'm inclined to
> jump on
> > anyway.
> >
> > I'm attaching two charts of the NASDAQ with the simple and exponential
> MA
> > combos to illustrate the difference. In a sense, some combination of
> MA
> > crossovers would seem to be a decent leading indicator - in a
> contrarian
> > way. No, I'm not trying to reheat that argument about leading/lagging
> > indicators - please, let's not go there again! If it's something that
> works
> > for you, then great - use it. If not, then don't. I'm just looking for
> > possibilities here. All I know is that when I see a crossover now, I
> start
> > to salivate... : )
> >
> > Regards,
> >
> > Dennis C.
> >
>
>
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