Hi JK,
Generally I consider the bear cross to be highly significant for most stocks. But keep in mind that just as different moving averages work better with some stocks, so too the bear cross or bull cross works better with some, and is not useful for others.
In general, the 50sma/200sma should not be taken lightly, and is usually highly significant.
But what about QQQQ?
I used to think it was highly significant there, until last summer.
stockcharts.com[h,a]daclyyay[df][pb50!b200!f][vc60]&pref=G
You can see that just as the bear cross was formed, the market was forming a V-bottom and begin a dramatic rally right smack in the middle of the "summer doldrums", when conventional wisdom says the market cannot rally strongly because everybody is on vacation until September!
So we certainly got whipsawed there, and that's because IMHO the bear cross (or bull cross) MUST be interpreted withing the context of the other indicators and the chart and volume and sentiment---like everything else, it should not be used alone.
That said, the longer term (5 year) chart of the 50ema/200ema that approximates the bull/bear cross shows that this occurs rarely, and should NOT be taken lightly when it does.
139.142.147.218
Going back much longer time periods, I think you will find that whipsaws with the 50/200 MAX are extremely rare (I don't have access to very long term charts, but I'd love to see this on a chart, or even better, a statistical/modeling analysis of the relationship over a time frame of 20 years or more).
So I would never ignore the cross, but the overwhelming bulk of evidence indicates we have reached the bottom predicted months ago and are making tentative, rather sputtering moves to lift off from that solid support now reached. A bear cross cannot negate that mass of evidence.
T |
