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
    Title: SPX - 50/200 Death Cross

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