I'm having trouble making sense of when the bigger picture trumps the small one, so to speak.
Basically, to my eyes the S&P 500 is topping out and so I'd be cautious about putting money into the market. However, the 30-week MA or 10-Month MA are still rising, so technically (as I understand it), you'd start looking at viable sectors to mine down further towards possible shares to play with.
So, the question is...when the chart seems to say one thing but the MA says something else, which one do you follow?
(This post was last modified: 2017-01-20, 08:07 AM by kero.)
RE: Beginners Questions
Quote:So, the question is...when the chart seems to say one thing but the MA says something else, which one do you follow?
Be careful about the optical effect of the tools we use.
When you are watching a bull trend in a chart, you always have - necessarily - the feeling that we're topping, because the prices are in the top of the chart. It's psychological.
Try to compress the chart, in a way that the price have still a lot of "place" to rise. You'll see that it's just a matter of perspective.
Quote:So, the question is...when the chart seems to say one thing but the MA says something else, which one do you follow?
Be careful about the optical effect of the tools we use.
When you are watching a bull trend in a chart, you always have - necessarily - the feeling that we're topping, because the prices are in the top of the chart. It's psychological.
Try to compress the chart, in a way that the price have still a lot of "place" to rise. You'll see that it's just a matter of perspective.
I see what you mean about the charting forming in direction that you might not have expected, and as such it just being a matter of perspective, as you say.
I guess my question goes to the deeper underlying philosophy of the system, in as such as the moving averages will always lag behind the actual price - so it's a safer system, but means you don't get the best buy or sell prices.
The basic object that you have to watch, is juste price action. If you have tops that are higher than the previous ones, the trend is bull. Otherwise, it is bear. Basically, it's just Dow's theory. Moving Averages are there to have a reference about the global move.
Hi, basic question probably. With regard to breakouts and pullbacks to the breakout point, how long does it take for a pullback to occur generally? Are we talking next day, next week, or next month? And does this vary if its a pullback from a stage 1 base compared to a pullback from a continuation breakout? Thanks
(2017-01-24, 11:40 AM)jacko666 Wrote: Hi, basic question probably. With regard to breakouts and pullbacks to the breakout point, how long does it take for a pullback to occur generally? Are we talking next day, next week, or next month? And does this vary if its a pullback from a stage 1 base compared to a pullback from a continuation breakout? Thanks
If you are referring to the investor B entry point (i.e. the first significant pullback towards the 30 week MA following a Stage 2A breakout) then this can vary depending on the quality of the breakout. If it pulls back very quickly then it's unlikely to be of much interest. But if it's a good quality breakout, then you'd expect it to run for four or more weeks higher before starting to pullback / consolidate. And hence the pullback period can be often be somewhere in the 1 to 3 months range on average imo on good quality breakouts. But every stock is different, so you have to use your judgement based on what the price action and volume etc is telling you.
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
