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To: BGR who wrote (84149)	12/7/1998 10:17:00 PM
From: Voltaire	Read Replies (2) \| Respond to of 176387

So basically what you are saying is, we need just TWO CHARTS. One- to tell us what earnings are going to be. Two- to tell us how the street is going to interpret those earnings. From the porch - good night. Voltaire

To: BGR who wrote (84149)	12/8/1998 1:20:00 AM
From: Moominoid	Read Replies (1) \| Respond to of 176387

No I'm not (unlike most proponents) interpreting BBs as a confidence interval. They are just a heuristic/empirical device that doesn't as far as I've yet seen a theoretical background. P-M (M is the moving average) is mean reverting - the longer the moving average the closer it is to a random walk. For the 13-34 day range I use (which includes the 20 classically used) statistical tests confirm it as non-integrated. Then my hypothesis is that the forecast interval for the moving average is far narrower than for the original random walk simply because the variance of this random walks shocks is much smaller. (As the period of the moving average increases these shocks tend towards a random walk themselves andf the moving average towards an I(2) process (integrated BM)). With the easier to forecast random walk and a mean reverting process I'm arguing you have an edge at working out what is going on vis a vis just looking at the original series. Things are still probabilistic but he forecast interval is narrower. Maybe there is some terrible fallacy in what I'm saying but it is the best justification I can come up with for this sort of TA. David