Posted by parkridge77 on 18th of Jul 2012 at 10:30 am
Steve/Matt- how reliable is this pattern as an indicator of
downside in your experience & can it be correlated to any
probable % degree of downside using fibs ( or something
else) on monthly charts ?
parkridge- I
personally never trade off a MA cross especially longer
term ones like that; by the time the 50 MA crosses the 200 MA, in
many cases the stock or index is extended and due for a bounce or
pullback. I note the crosses and then observe the action
afterwards, also observe how overbought or oversold price is once
the MA's cross - for example if the stock or index is very
overbought when 50 MA crosses above the 200 MA, then chances are
much greater for a pullback to occur right after or even a whipsaw
where the MA's just cross right back the other way. Focus on
trading price and stock patterns first and foremost rather than a
MA cross like that.
Also for MA crosses, employing my simple BPT whipsaw method that
requires a confirming candle in the same direction greatly reduces
whipsaws of most MA cross systems by cutting out 30% - 50% of the
false signals - what I mean by false signal is the times when the
MA's just briefly cross but then whip right back the other way.
Here's a few examples that I've show before. Also review
the MACD trending videos that I posted on Sunday and yesterday, the
whipsaw filter that I employ there is exactly the same method, this
whipsaw method works with any indicator, MA crosses, MACD,
Stochastics, CCI, etc. However again price and stock patterns
are the most important, indicators lag and are tools only.
I'm not saying that MA crosses are not important at times,
however you need to combine them with other things analysis and not
use them on their own.
It seems these Death Crosses often happen at the end of Bear
moves, not near the beginning. This 50/200 Monthly cross indicates
the last 4 years have been declining faster than the last 17 years,
so one might see this as the capitulation of the Bear which started
12 years ago. What does history show on these longer term
crosses?
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
SPX - 50/200 Death Cross
Posted by saturn6 on 18th of Jul 2012 at 10:05 am
Lots of rhetoric on the gloomy look of monthly death cross...
monthly spx 50/200 death cross
Posted by parkridge77 on 18th of Jul 2012 at 10:30 am
Steve/Matt- how reliable is this pattern as an indicator of downside in your experience & can it be correlated to any probable % degree of downside using fibs ( or something else) on monthly charts ?
parkridge- I personally never trade off
Posted by matt on 18th of Jul 2012 at 10:44 am
parkridge- I personally never trade off a MA cross especially longer term ones like that; by the time the 50 MA crosses the 200 MA, in many cases the stock or index is extended and due for a bounce or pullback. I note the crosses and then observe the action afterwards, also observe how overbought or oversold price is once the MA's cross - for example if the stock or index is very overbought when 50 MA crosses above the 200 MA, then chances are much greater for a pullback to occur right after or even a whipsaw where the MA's just cross right back the other way. Focus on trading price and stock patterns first and foremost rather than a MA cross like that.
Also for MA crosses, employing my simple BPT whipsaw method that requires a confirming candle in the same direction greatly reduces whipsaws of most MA cross systems by cutting out 30% - 50% of the false signals - what I mean by false signal is the times when the MA's just briefly cross but then whip right back the other way.
Here's a few examples that I've show before. Also review the MACD trending videos that I posted on Sunday and yesterday, the whipsaw filter that I employ there is exactly the same method, this whipsaw method works with any indicator, MA crosses, MACD, Stochastics, CCI, etc. However again price and stock patterns are the most important, indicators lag and are tools only. I'm not saying that MA crosses are not important at times, however you need to combine them with other things analysis and not use them on their own.
Link to MACD Videos
SPX - 50/200 Death Cross
Posted by sethbru on 18th of Jul 2012 at 10:25 am
It seems these Death Crosses often happen at the end of Bear moves, not near the beginning. This 50/200 Monthly cross indicates the last 4 years have been declining faster than the last 17 years, so one might see this as the capitulation of the Bear which started 12 years ago. What does history show on these longer term crosses?