Re TA (continued)
once the stock penetrates the 50 days moving average, it will not stop till hit 200 days average
Li Cai, Are you saying this is an immutable law? Like gravity?
Or merely a belief that this sometimes happens based on past experience. And if as I suspect its the latter, then presumably it doesnt always happen and if it doesnt always happen,then maybe none of your forecasts will come to pass?
There may be millions of people who trade on this basis (I dont doubt it) but they often look very foolish when they peer above their screens and notice something just happened in the world outside that just made all their statistics redundant. Something as simple as an upgrading of earnings or something as complex as a war.
While I believe that there is something in TA, I'll make my case that it is not laws of physics, but averages and probababilities and is meaningless unless combined with news of the outside world.
In fact, as a test of TA, what will the stock price be next Thursday afternoon at 2:30pm? :-)
Or , to take your exact points, if the stock does not reach above 39 by next Friday, on what date will it hit the 200 day MA, what will its price be then, and when will it start moving back up. Also, what is the probablilty of the scenarios you outlined, ie bouncing between 50 days/200 days and moving below 200 days, and what are these prices.
I guess we'll have to agree to disagree,
Regards sceptically,
Joe C |
