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Dennis,
I also use simple moving averages and find them more useful than the more
dynamic "exponentials". The area of analysis that still intrigues me, on a
daily/nightly basis, is the ability for these fib averages to act as
intraday support and resistance.
Steve Karnish
Cedar Creek Trading
http://www.cedarcreektrading.com
----- Original Message -----
From: Dennis L. Conn <dennisconn@xxxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Cc: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, May 14, 2000 6:58 PM
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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