Forum Archive Index - May 2003

[Phaedrus <Phaedrus@techemail.com>]

Skelessi,
         It is not the magnitude of the dip that generates the sell signal, it 
is whether the price crosses below the moving average or not. On 1/10/02 WHS 
closed at $7.05 when the 200 day moving average was at $7.05482. This is $7.05 
in my book, so the price closed right on the moving average - certainly it did 
not clearly and decisively break below it. Two months later on 28/11/02 WHS 
closed at $7.08 when the 200 day moving average was at $7.12. This was a clear 
break, and thus a Sell signal. I am surprised that you think this smacks of 
hindsight - with hindsight I would have said that the first "signal" (fully two 
months earlier) was the better one, surely? 
 Here is how the weakness progressed :-
16/07/02 Break of Short-term moving average (60 day ema)
17/07/02 End of Uptrend (Lower Low after a lower High)
23/07/02 Trendline Break (I exited here)
24/07/02 Break of Medium-term Moving Average (120 day ema)
28/11/02 Break of Long-term Moving Average (200 day ema)
 I never use a 200 day ema myself - I put it on the chart because it is 
commonly used by many conservative long-term investors to keep them on the 
right side of major trends. 
 Can I please explain why I did not see the impending dip as coming  sooner??? 
Skelessi, I didn't see it coming at all! All I saw (and reacted to) was the 
increasing technical weakness of WHS. That's all. I was not surprised by the 
later fall, but certainly did not forsee it. These signals are reactive, not 
predictive.
       Regards,
                Phaedrus.


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