Hugh,
There are two moving averages of major significance; the 50 day and 200 day MA. Why are these signicant? Because these are what traders (pack mentality use) to base their decisions on. The 50 day MA provides a shorter term trend and the 200 day MA provides the longer term trend. Yes, you can create any MA you wish, but the pack always look at these two. AXC already fell below its 50 day MA last week. I use the 50 day MA as one of many indicators for entering & exiting a stock. Although the 50 day MA was penetrated, many other indicators were still positive enough (oversold stochastics, strong support levels, etc.) for me to maintain my trading position. However if the 200 day MA is broken, I will liquidate my trading position. This is one of the single most important technical indicators. Usually when a stock breaks above or below the 200 day MA, it will stay above or below this MA for a long time. Check out any actively traded stock & you will see what I mean. This is one indicator that will be discussed in any study of TA, not something I just made up. I don't know of many serious traders that maintain trading positions in any security that is below the 200 day MA. Regarding AXC, I think it is better than 50/50, it will hold a closing position above 8 1/8 and probably bounce from here (especially since GB won). If it does, it is holding its longer term positive action. Otherwise, it can drop back to the 6 1/2 area IMO, and 8 1/2 will become the area of future resistance.
As I said before, I am still holding a sizeable long term position because you never know when the next catalyst will come to move this baby.
AE |
