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Strategies & Market Trends : Rolling Averages, Their ins and outs and ups and downs -- Ignore unavailable to you. Want to Upgrade?

To: nasdaqian who wrote (15)	12/30/1999 4:16:00 PM
From: Drygulch Dan	Read Replies (2) \| Respond to of 31

Though I'm sure your ideas have some merit, but here's the difference. Tomorrow's moving average is already limited to a range of values based on the prior values that will be built into the calculation of tomorrow's moving average but tomorrow's price has no prior controlling factor that limits its movement. Consider the extreme case. Lets say a stock has been trading right at 100 for months. A 100 day moving average has already reported 99 of the 100 data bits that will be used to construct tomorrow's 100 day MA point. So even in the extreme case, say the stock breaks down to 50. its moving average might be the sum of 100 each for the first 99 days and 50 for the future data point. So 99X100 + 50 = 9950 / 100 results in a future 100 day MA value of 99.5 for tomorrow after factoring in the severe case of break from 100 to 50 in the stock price. But the thing is you know this before the break to 50! And if it only breaks to 95 your projected MA is even closer to tomorrow's reality. This assumes for a first pass, that you take today's price and just project it forward with no change into tomorrow to construct tomorrow's rolling averages. The point is you really know a lot about the future of rolling averages, if you project them out a little ways. This can tell you some interesting things about the possibilities for the future of the stock price, especially in cyclic stocks when you are close to a cycle extreme. Did someone say something about semiconductors ? Talk about cyclical! Jeez, I never thought about the Y2K problem in terms of Russian silos. Why didn't we have them pour concrete in the bunkers from the torn down Berlin Wall ? Maybe we will never be able to explore these ideas further...too bad, I think there is money in them.