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Strategies & Market Trends : Analysis Class for Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Mary A Young who wrote (836)	6/9/1998 11:05:00 PM
From: Arthur Tang	Read Replies (2) \| Respond to of 1471

Thank you, Mary. If you are a technical analysis enthusiast, you have to learn all the indicators. Many variations of moving averages are being used by many investors. ARMS institute is still researching on their new methods. But trend lines are more positive, because they are real time, moving average is always only an integration of all the past prices. Any technical analysis, without drawing trend lines first then try to confirm an opinion by using moving average, is not doing the job right.

To: Mary A Young who wrote (836)	6/9/1998 11:57:00 PM
From: Trader X	Read Replies (4) \| Respond to of 1471

Mary, an answer to your MACD question. <<trying to understand MACD>> I disagree with Tang -- MACD is a very useful leading indicator for predicting turning points...buy and sell signals. Trendlines alone will help you only so far. MACD stands for "moving average convergence/divergence." This is an oscillator based on exponential moving averages. The standard formula subtracts the difference between a long term (26 week) and short term (12 week) exponential moving average. This difference is then made into another moving average (9 week) before display. click here for an example: chart2.bigcharts.com:80/chart?time=7&freq=1&uf=0&lf=4&type=4&style=3&size=3&compidx=aaaaa&symb=kr&comp=&maval=10&state=0&ma=3&r=chart&onbad=badsymbol&country=us&sid=2783&sec=c&xyz=53998859&s=16667 As with all oscillators, look for a divergence from the price pattern and trend within the oscillator. In the example above, KR made a price low near $40 about May 15, but the oscillator was making higher lows from late April to mid-May. This is what's called a "divergence", when the oscillator pattern and price pattern diverge from each other. It's a very reliable short-term forecast for price trend changes. In the same example, higher prices from Feb to April was being met by a diverging MACD which was making progressively lower highs. Could a trendline alone have gotten you into the stock as soon as the MACD? Possibly. The mid-May low held support at the trendline going back to Sept '97. chart2.bigcharts.com:80/chart?time=9&freq=1&uf=0&lf=4&type=4&style=3&size=3&compidx=aaaaa&symb=kr&comp=&maval=10&state=0&ma=3&r=chart&onbad=badsymbol&country=us&sid=2783&sec=c&xyz=54613968&s=25256 But the MACD was valuable as confirmation. It's important to have confirmation in T/A, and that is the reason people look at a multitude of indicators, rather than simply "trendlines". Trader X