Randy, it's a good question. Here's a chart. Moving averages of the length you
describe don't react to short term movements quickly. This latest rally of one week's
duration has had NO discernable effect on the longer MA's.
geocities.com
Red, 200...light blue, 150...dark blue, 90 and the 50 is the dark yellow.
A downward cross of a longer MA by a shorter can always be
interpreted as a negative. Depending on the length of the averages
a downward cross always indicates a negative price movement has
occurred. Longer averages are kind of like a time machine...reacting to what
has happened.
A conservative long term investor would wait
for the security to be trading above it's major MA's....the overall
chart will be in a long term bearish configuration 'til that occurs,
technically speaking. So yes...for some...caution would dictate waiting
until all the ducks are in a row, i.e. the average are uniformly stacked,
shorter on top, longer on the bottom...
These longer averages are not yet being affected by the positive
circumstances that seem to be prevailing. Note that even with this
severe downturn of late that the 90, 150 and 200 MA's have failed
to reach a negative cross. The 50 MA has reacted negatively to the
severe drop in price..30 to 11...with it's ensuing negative crosses.
My positive comments on ACRT's charts have been noted as referring
(for now) to it's short term chart. There have are significant indications
of some mid term positives now emerging. More on that this weekend.
Stan
NOTE, this chart is EQUIVOLUME. "Canned info"
The shape of each Equivolume box provides a picture of the supply and demand for the security during a specific trading period. Short and wide boxes (i.e., small change in price combined with heavy volume) tend to be seen at turning points, while tall and narrow boxes (i.e., large change combined with low volume) are more likely to be seen during continuing moves.
Especially important are boxes which penetrate old support or resistance levels since it takes "power" to create a reliable penetration. A "power box" is one in which both height and width increase substantially. Lack of box width, due to light volume, puts the validity of a breakout in question.
The more volume in a top or bottom consolidation, the larger the ensuing move is likely to be. Volume is directly observable on an Equivolume chart by noting the overall width of the consolidation. |
