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Technology Stocks : Jimbo's Playhouse/CPQ
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To: Mao II who wrote (8250)11/29/2000 2:19:46 PM
From: Night Writer   of 12662
 
M2,
You would think a 2 for one split would keep the all ratios the same. However, the 2 for 1 split does something to the averages and other TA signals. An electronic chart price history is adjusted to reflect a split. The split lessens the difference in the averages and creates more buy and sell signals. From memory the CPN chart had an almost smooth up trend line with no sell signals. Now I look at the chart and see two sell and buy signals I do not recall. So at this time, I think it would be wise not to test TA on electronic charts where the stock has a split in it's history. To put it another way, a $4 price drop after a $12 advance might not trigger a sell signal, but a $2 price drop after a $6 advance might trigger a sell signal... I haven't tested this so I could be completely wrong.
NW
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