5-15-50 moving averages

[yclept]

$spx: 5>15>50
$dji: 5>15>50
$comp.q: 5>15>50

$ixf: 5<15>50

So all but the NASDAQ 100 have passed back to full-buy status.

[rovo]

Yclept, QQQ meets the full buy but $IXF does not. $IXF is the Nasdaq Financial Index.

[yclept]

Yep,
$ndx: 5>15>50

I guess I'm reaching the age were all those symbols kind of blur together. Not a good sign!
But then, maybe I'll only need my brain for a few more years. With the exponential advance of AI, I don't expect human intelligence will be competitive in the markets for much more than another 5 years or so. I think within a couple of years the most advanced AI will be designing the next generation AI, at which point we'll be approaching the nearly vertical part of the exponential curve. Human intelligence will be left in the dust. The only real advantage the human mind still has is in massive parallel processing, and that is rapidly being duplicated by machines.

[2kids10horses]

yclept,

Can you give us an update on your tea leaves?

My reading of the Nasdaq Index shows a head and shoulders bottom, indicating a 150 to 200 point upside on today's upside breakout on heavier volume.

Mind you, my 150-200 point guesstamate is just that... but I will say the overall trend is up.

What say your moving averages?

EDIT: Whoa! When I went to the end of the thread, the last post was for 4-15-2011. So, I entered my post. Then, when I looked at my just entered post, I saw that you HAD posted an update! Something is fishy in the land of ProBoards!

EDIT AGAIN! Oops! My fault! The post of 4-16-2011 was at the end of a page, I had to go to the NEXT page to see the most recent postings.

What was that you were saying about Artificial Intellegence?

2k10h

[rovo]

2&10 and others, Posts having been updated since your last reading will have a "NEW" next to the title. Placing your cursor over the "NEW" will show a little "new" in a box. If you then "click left" it will open the thread to the first new post since your last visit to the thread.

[2kids10horses]

Yup, that's exactly what I did, and it just so happened that it displayed the last post on page 2. Which looks like the end of the thread. So, I posted my first question, not realizing there was more on page 3. Once I posted, it put my post on the end of page 3, and it appeared that new posts were placed just ahead of me, which confused me for a second, until I realized what happened.

[yclept]

dji: 5<15>50
spx: 5<15>50
comp: 5<15>50
ndx: 5<15>50

All fives dropped below 15 either yesterday or today. My screens have been dragging me farther back into the market lately, but it looks to me like it's time to reverse that course.

[yclept]

5>15>50 for the four indices I follow. 5s crossed back above 15s yesterday.

[yclept]

Sorry, I haven't been doing a good job of tracking or updating status of these moving averages.
All four indices I track now have 5<15>50

[yclept]

All four averages I track now have 5<15<50
This is a full-out sell and go short signal.
I may add to my ETF short positions today; earlier I bought (long) the Chile ETF, which was probably dumb, but so far it's up -- seemed like I should have some long exposure to a part of the world that isn't about to melt down.
The major long value screen I use is still pulling the solar stocks I still have (TSL and SOL) and since this sector has already been taken to the woodshed, I'll probably keep enduring the losses there unless and until the screen drops them altogether.
The screen is set to pull the top 10 in it's ranking and almost always lists 10 tickers. Today it could only list 7, which means that the entire screen could only pass 7 stocks. This rarely happens, and is another sign we are headed to hell in a handcart at least for the time-being.

[yclept]

I did a bunch of data-mining yesterday (fully aware of the arguments pro and con regarding validity of same) and have decided to change my buy/sell parameters.
I mentioned earlier that I was paying more attention to the 5/15 moving average pairing than to the 15/50 as I found the latter too slow (granted it avoids more whipsaws than the faster pair).
So anyway, yesterday I took my best value screen and backtested it over many yearly intervals using various moving average crossovers of SPX as an indicator to be invested in the screen or cash. I concluded that the best moving average pair to use with this particular screen is 4/14, and am going to do so from now on for my own investing with that screen.
The most recent sell signals did not vary a lot from using the different cross-overs, but the slowest one obviously subjected one to more of a beating:

In any case, using any of these signals one would be shed of long positions now. I got rid of the last of mine this morning (unless one considers TBT, the bond short, as sort of an artificial long on stocks -- it's the only thing I own that's giving me a noticeable portfolio beating today).
I think everyone knows by now how to find moving average crossovers from having read posts above and followed links embedded in them.
I'm not going to try any more to justify the mathematical validity of this signal nor of market timing -- I'm sure one can find arguments for and against it all over the web. All I'm saying is that I'm going to use 4/14 crossovers for my own timing. Others will do what they see best -- differing opinions are what make a market.
I will still try to update this thread when I see cross-overs of the original 5/15/50 moving average signals. But I wanted to mention that I'm not paying as much attention to them as I used to -- the 4/14 crossovers will be automatically handled within my screener and will appear to me as events: "whoops time to sell everything; whoops time to get back in by buying positions in each of these stocks"!

[yclept]

The indices I follow are all still giving clear "sell and go short" signals on the 5-15-50 moving averages. Likewise the new one I've decided to use, 4-14 which my recent data-mining convinced me was slightly better than 5-15 over the last few years.
We are about to take-out the March lows. March was in the favorable season of the year; June is in the unfavorable season. Recent rally attempts May 25-31, June 9, and June 14 have all gone down in flames yielding consistently lower highs and lower lows. There have been many days like today where morning rally attempts yield to afternoon collapses.
I think we have a lot farther to fall, but that's just my opinion based upon what I see of fundamental world events. I can easily find many stocks that are undervalued, but right now that doesn't seem to matter much -- we're in a "falling tide lowers all boats" market. But, I don't count my opinion for much. I will continue to watch these moving averages on a daily bar basis and react accordingly.
Right now I'm about 1/3 of the ports short (in leveraged ETFs, so in a way, it really counts as more than 1/3 of assets); I have a couple of long positions that I was stupid enough to buy a few days ago, and that are flogging me daily; but they will disappear soon, and the rest is cash. I have plenty of dry powder earning nothing that will be ready to dive into the market once the worm turns.

[2kids10horses]

yclept,

I think we're at a tipping point here. I belong to the "support and resistance" school of techical analysis, and either the support holds and we go up from here, or the current support levels fails, well, then we go down big time. The next week or so will be telling.

[yclept]

I agree. There are many analysts and commentators who are saying this is a very important level to hold. And if many people say and believe it, then it becomes a self-fulfilling prophecy. It's actually kind of funny that technical indicators, seasonality, presidential cycles, wave theory, etc. are all in the category of being impossible to distinguish as to whether they are cause or effect. Then there is the pyramiding or cascading effect they have on one another. One particular cross over and the market reaction to same is likely to trigger violation of some other support level whose reaction in the market triggers some other signal, and the next thing you know the move has a life of its own.

Underlying the whole thing is economic and political action or inaction that in the long run either justify or refute market levels and bring them back to something closer to reality.

Right now I see the political and economic situation as bleak. People (I'm using "people" generically to represent individuals, institutions, and corporate entities) are afraid and unwilling to take on much risk or buy much of anything. This has led to outrage that placed a lot of dolts in Congress who seem hell bent to have their way or tear the whole economy down (tea partiests and their drooling ilk). They are economically myopic, able to focus on only one thing (the deficit) without the common sense God gave geese to realize that the the best answer always lies in the middle and that compromise finds that middle ground. I fear that the economic situation is going to have to get a lot worse and that a whole lot more of society's wealth is going to have to be transferred to the ultra-rich before the outrage will swing back the other way. There are an awful lot of stupid people and unfortunately they all have a right to vote.

For these reasons, I see the economic outlook as bleak. The market seems to be having a hard time believing how bad things are likely to get, but once it makes up it's mind I expect it to cascade downwards with a vengeance.

I'll be happy to be proven wrong in the above conclusions and accept that my negatively biased portfolio will incur some losses while I wait for my signals to confirm that I am wrong. The losses will be less than my gains have been over the last month or so as I moved to ever more short positions and threw out long positions. A prolonged period of indecision would be bad for my tactic, likely causing whiplash after whiplash. Fortunately with the deadline for passing an extension of the debt ceiling fast approaching, we cannot experience a prolonged period of indecision. Therefore I don't expect indecision to be the case over the next several months. I think Congress will not pass the borrowing authorization in a timely manner, the US will default on some payments (most likely payments due to private industry and employees, rather than to the rich treasury bond holders -- I understand Geithner has already suspended payments to employee pension funds and stopped borrowing that funded federal aid to state infrastructure projects) and that the market will go down hard as one indicator after another trips the next and sends us towards a capitulation bottom. As with all market trends, it will go too far down, just as this last upwards movement sent us unjustifiably high. The cock is about to crow and we have seen at least two denials so far:

www.businessinsider.com/a-quick-guide-to-the-the-debt-limit-debate-2011-5

www.bloomberg.com/news/2011-05-03/geithner-extends-debt-ceiling-deadline-by-three-weeks-to-august.html

Like I said above, I'll be happy to be proven wrong on this analysis/speculation. So long as I'm on the right side of the market the majority of the time, my portfolios will do just fine.

Please inform General A.P. Hill I need him to move his forces up with all possible speed. Generals Early and Lawton are sorely in need of his support.

[clarkrl2]

The point and figure chart for QQQ is also right at the support level. If QQQ (nasdaq 100 etf) falls below 53 the next level of support would be 42-43.

The DIA (Dow 30 industrials etf) and SPY (S&P 500 etf) are also near support but not yet bearish.

[2kids10horses]

It will be interesting... I'm not afraid of going short. I LOVE the inverse ETFs that make it easy to play the short side.

There was this market analyst I used to follow who was able to draw remarkable similiarities of the current Nasdaq index to the Dow of the late '20's and 30s. I mean, it's uncanny how similar the charts are. Using the theory that history repeats itself, we still have about 5 years to go before the next secular bull market. Until then, it's bear to flat. (If the current Nasdaq takes as long to recover as the Dow did back in the 30s.)

I'll see if I can dig up one of his comparison charts. It's really scary how similar they are.

[yclept]

The 4/14 for the $SPX has crossed positive. I should be dumping shorts like crazy and going long, but I haven't yet. I found yesterday's volume on the big percentage move up unconvincing. I know, I know, what good is a system if one doesn't follow it?

The 5/15/50 on $SPX is still negative, but the 5 will be crossing above the 15 in a day or so, unless this market goes down very hard; that, of course, will still not be a "buy" signal using that indicator as the 15 is still well below the 50.

[Driftr]

I think it was Clausewitz that said 'no battle plan survives first contact with the enemy'.

[2kids10horses]

yclept,

A couple of weeks ago, I posted some charts that showed how we were right at a support level. It appears that we bounced off support, and today, we hit resistance:






We can only wonder that if today's jobs report had been a good one would we have blown thru resistance? The good thing about today's market action is that the market clawed back up after the opening gap down.

Next week we will see if something can stimulate the market to break thru up, or are we doomed to stay in the trading range another cycle.

2k10h

[2kids10horses]

I just went and took a longer term look... the current resistance line goes back to October 2007. If we break over that, then we will see the Nasdaq at levels we haven't seen since 2000.

[yclept]

I almost hate to mention it, but 5>15>50 on SPX, DJI, COMP, and NDX -- the 15s all crossed above the 50s within the last two days; but the 5 is falling like a rock, and it looks inevitable that the 5s will cross below the 15s within a few days.

[Driftr]

Have you run the umbers on the 5-15-50 averages for the last 12-24 months on something like DIA or SPY to see if you'd be getting whipsawed out of more than you'd be earning? I like the 5-15-50 average concept, but don't have the time to go back and figure all the inflection points when all three were one direction or the other and calculate the prices of one of those two on those dates. If you have or could (easily), I'd be really interested to see the results.

[yclept]

stockcharts.com/h-sc/ui

The above link will take you to stockcharts where you can see the various crossovers and can change to other indices or tickers you might want to investigate. Unfortunately the link doesn't preserve settings, so you have to go down to "overlays" where they give you a place to set the moving averages. For this signal you want them to be 5, 15, and 50 day settings. I've never found a significant difference whether one uses SMA (simple moving average) or EMA (exponential moving average). The values may differ a little, but the crossovers will occur on the same days. I use daily bars to form my opinion of market direction, though, one can use any bars one is inclined to (but this way lies madness -- should we get down to "tick" bars?).

I think I cataloged all crossovers on this thread since late December when I started it after the demise of the MSN boards. Admittedly they're mixed in with a bunch of other stuff. It's probably easier to just observe them on the stockcharts chart; get the crossover dates from there and then use those dates for whatever historical studies you want to do.

I have done studies (mostly to optimize the moving averages used) over the many years I've been observing this timing algorithm, but don't have them anymore in any form I can post. My general conclusion is that using this will avoid big market reversals without subjecting one to an inordinate number of whipsaws.

As detailed in a post somewhere above, I've lately been using the 4/14 moving average crossover for more of my market direction decisions. I've decided I'd rather incur the whipsaws than miss the gains (or avoid the losses) inherent in this slower 5/15/50 signal. Any mechanical timing system by definition lags what the market is actually doing. One has to balance tolerance for false signals (whipsaws) against missed opportunity (lag of the signal) -- ya pays yer money and ya takes yer choice!

[yclept]

The 5 sma has crossed below the 15 for three of the indices I follow. The fourth will likely cross today or Monday.

[Driftr]

Thanks for the link above. Last week I started looking at this and I could only go back a little over a year without it getting too tough for me to pick out the crosses and prices. Might be able to do more if I played more with the date ranges, but wanted to try and prove it quick and dirty. What I found so far looks good though for using this strategy whenever the 5&15 are on the same side of the 50.

Anyone who wants, please check my numbers. I only figured on going long SPY, but I'm sure more could be made by going short when the indications were there.
all for SPY and based on closing prices the day of the second cross:
03/09/10 buy @ 108.49
05/13/10 sell @114.32 +5.37%
09/06/10 buy @ 107.21
03/21/11 sell @129.32 +20.62%
04/06/11 buy @130.21
06/02/11 sell @132.55 +1.80%
07/13/11 buy @ 131.35 - still open I think

SPY right now is 131.80 which is up 21.49% versus where this started 3/9/10. Total above only going long was 27.79%.

[yclept]

5>15>50 or inevitably will be (just from momentum) on all four indices I track. Likewise the 4/14 is crossing positive. Clearly I was whipsawed on the latest signal to the dark side. If one is going to use faster signals, one has to accept more whipsaws.

[yclept]

SPX has crashed convincingly below the 200 d MA
5 MA is below both the 15 and the 50 and is in a nearly vertical plunge downward. It may cross below the 200 MA today.
15 MA is still above the 50, but will probably cross below tomorrow; slope is convincingly down.
50 MA -- slope is down and has been since early June.

Lots of money flowing out of the hands of the middle class (retirement funds, etc.) today into the hands of the ultra-rich. But that's what their lackeys in the pee party were sent to Washington to do.

"Hey, pee party lackey, get me a cold drink while you're up, then get back to cleaning the bathrooms. I'll tell the ultra-rich to see to it there will be a little something in it for you come next election time."

Swiss Franc (via FXF) up today by another 2%. How high can the currency of a little country like that go before it ruins their entire economy? Surprisingly, the USD is also up today -- I'm guessing foreign investors leaping out of the frying pan into the fire!

[yclept]

SPX and DJI now have 5<15<50; full sell (and go short) signal based on this indicator.
COMP and NDX still have the 15 a little above the 50, but momentum alone will make them cross down within the next day or two.

These four indices are now all below their 200 dMA.

The faster 4/14 cross that I'm using has all of these indices in "sell" territory, as I'm sure I've mentioned somewhere above.

Referring to earlier posts it looks like I forgot to mention the 4/14 cross downs -- sorry. But then, I think I'm the only one convinced that this faster signal is worthwhile, so hopefully no harm. If anyone else is using it, you have to set up charts and check it often as it can turn in very short order, and it's best not to rely on me to remember to post when it turns.