Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: kodiak_bull who wrote (13777)	5/9/2002 7:29:09 PM
From: pvz	Read Replies (2) \| Respond to of 23153

KB, it took me a while to figure that one out, and I could never understand why this crossover concept was considered to be bullish or bearish. In fact, I thought it was techno-voodoo. Then one day after looking at it on and off for ages, it just clicked. Look at this chart of CTS as an example. stockcharts.com[e,a]daclyyay[dc][pb50!d20,2!b200!h.02,.20!c200!c20!c9!c13!i!f][vc60][iut!Ue12,26,21!Ub13!Ud80!Lo13!Ll20!Lp20,9,5!Lah12,26,9!Lf!Lc20]&pref=G The 50 dma is about to cross up through the 200 dma, most likely by tomorrow. That means the trend is picking up and dragging the short term moving average with it, while the longer term average is still lagging. If you were to look at the price movement without any moving averages you might think it was all over the place, so this crossover concept is great for determining where the trend is going. In this case the 200dma is still sloping down slightly, which might indicate that a 'safe' uptrend still has to start and the stock could still be quite volatile. It could be good for bottom picking, especially because the 50dma is showing a nice uptrend. Does that make sense? The opposite would hold true for 50 dma crossing down through the 200 dma. The same theory works for any combination of moving averages you choose to look at, although the shorter the duration, the shorter the period you could expect the trend to last. Now, as for how it relates to the CPC/VIX chart, the crossover indicates the short term trend is falling relative to the longer term trend. Mathematically, either the put-call ratio is falling or the vix is rising (or a combination of the two). And as for how this sentiment measurements works in relation to market bottoms, I have some theories, but it is largely still techno-voodoo to me! pvz