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Strategies & Market Trends : FOLLOW THE GENERALS

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From: Jim Battaglia5/30/2006 8:06:27 PM
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TripleScreenMethod:



Chart highlights consecutive runs for the S&P in 2005: a 67.2 point fall between 8/4/05 and 10/20/05 followed by a 87.8 point rise to 11/23/05. Notice the general inverse relation with N200dMA over the two, contrasting periods. The smoother line traces N200dMA’s 10-day moving average, which I’ll call 10DMA. When the S&P falls, N200dMA rises, and its 10DMA mostly tracks under N200dMA. The actual number of liquid stocks trading below their respective 200-day moving averages is more than its 10-day moving average model would estimate.

The inverse is true too: a rising S&P results in a falling N200dMA and its 10DMA predicting more stocks trading below their respective 200-day moving average than observed, i.e., 10DMA now lies above N200dMA. The “amazing 200” measure of market strength--I call SumDiff--is the running sum of the difference between N200dMA and its 10DMA.
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