>>Regarding the 50 DMA, I was mistaken to say that $15 is the intersect price. It's actually around $18.<<
That looks like the simple moving average(MA). The more accurate MA is the exponential MA which for PWAV is around $16 1/4. Why is this important? A simple MA changes twice in response to each piece of data, first when it is added, second when it is dropped. When a high price is dropped, the simple MA moves down, a low price ...up. These changes have nothing to do with the current situation of the market. Dr. Alexander Elder, author of Trading for a Living, says a simple MA is like a guard dog that barks twice...once when someone approaches the house and again when they leave. You don't know when to believe that dog.
An exponential MA (EMA) gives greater weight to more recent data and responds quicker. Unfortunately , you need a computer to figure it. You do not even want to see the equation :).
Something else significant is that the 7 day EMA is about to crossover the 20 day EMA, something that hasn't happened since mid November, where it failed to complete the crossover. Both of these EMA's are trending up and the slope of the 50 day EMA is beginning to flatten, ie. the price is going up. PWAV is showing signs of accumulation also. All this started as a result of the announcements regarding non Asian orders, which is not too surprising.
Why does anyone care what these MA's are doing? There are many types of traders and disciplines/methods. There is a type waiting on the wings to buy when these MA's start moving up and crossing over longer term MA's. These are people that don't like to guess at bottoms, and when they feel the risk has abated, they may become buyers. That is why you care :). |
