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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: stan s. who wrote (15573)	3/22/1998 11:45:00 AM
From: stan s.	Respond to of 25960

Some TA on CYMI with respect to Volume Adjusted moving averages... This is in response to a private message. I thought I would post it here for those interested. This only deals with short to mid term issues and is of little concern to most who post here. Keep in mind this is simply in response to a specific query. I'm making no predictions. A chart of CYMI. In the top box I have plotted the 10 and 21 day VAMA (volume adjusted moving averages). The 10 is in white, 21 in black. As in all crosses of this type, positive signals are generated when the shorter MA crosses above the longer and negative signals as it crosses below. geocities.com I use this as lagging indicator to give confirmation to the more sensitive momentum indicators, i.e. Stochastics, CCI etc. Note the arrows have been a pretty good indicator for CYMI, though as mentioned, the VAMA lags a bit. An interesting aside to the CYMI chart. It's in a mild Bollinger squeeze of the same intensity that erupted to the upside in late January. Bollinger squeezes are unpredictable in duration but usually end in a bang....up or down. More often than not to the upside. This one bears a close watch though. Notice the mid term signals in the middle box (MACD, TRIX) were in a decidedly up mode before the late January surge. That's not the case here...hence it's deserving of a bit more scrutiny. The Bollingers in this instance, give a pretty good indication of support and resistance. Following is a bit of info on moving averages with some emphasis on the Volume Adjusted. A moving average is a method of calculating the average value of a security's price, or indicator, over a period of time. The term "moving" implies, and rightly so, that the average changes or moves. When calculating a moving average, a mathematical analysis of the security's average value over a predetermined time period is made. As the security's price changes over time, its average price moves up or down. The only significant difference between the various types of moving averages is the weight assigned to the most recent data. Once this "weighting" scheme has been determined, it is held static over the range of calculations. The exceptions are the variable moving average and volume adjusted moving average. The variable moving average automatically adjusts its weighting based on market conditions. A variable moving average becomes more sensitive to recent data as volatility increases and less sensitive to recent data as volatility decreases. Similarly, the volume adjusted moving average automatically adjusts as the security's volume increases and decreases. Dick Arms, well-known as the developer of the Arms Index and the equivolume charting method, has developed a unique method for calculating moving averages. In keeping with his prior work, the calculation method incorporates volume and is appropriately called a volume adjusted moving average . The calculation for a volume adjusted moving average is somewhat complex; however, it is conceptually easy to understand. All moving averages (even volume adjusted) use some type of weighting scheme to "average" the data. Exponential and weighted moving averages assign the majority of weight to the most recent data. Simple moving averages assign the weight equally across all data. Variable moving averages assign the majority of the weight to the most volatile data. And as its name implies, volume adjusted moving averages assign the majority of weight to the day's with the most volume. A volume adjusted moving average is calculated as follows: 1. Calculate the average volume using every time period in the chart. 2. Calculate the volume increment by multiplying the average volume by 0.67. 3. Calculate each period's volume ratio by dividing each period's actual volume by the volume increment. 4. Starting at the most recent time period and working backwards, multiply each period's price by the period's volume ratio and cumulatively sum these values until the user-specified number of volume increments is reached. Note that only a fraction of the last period's volume will likely be used.