January 2011
Moving Averages 250/100 Signal (MA250/100)
Submitted by Van Beek on January 7, 2011 - 11:14The Moving Averages 250/100 Signal (MA250/100) is less frequently used than the MA200.
The MA250/100 compares the 250-day Moving Average with the 100-day Moving Average.
The MA250 is a more conservative signal that often identifies changes in the trend direction later than the MATI and MA200. You can expect fewer false signals from the MA250. But by just following the MA250, you can expect to be late in buying and late in selling. You can see the MA250 as confirmation signal for the indicators that are already given by the other Trend Signals.
When the 100-day Moving Average crosses the 250-day Moving Average and ends up more than 1% above it, you can see this as a “Buy” signal.
When the 100-day Moving Average crosses the 250-day Moving Average and ends up more than 1% below it, you can see this as a “Sell” signal.
Moving Averages 200/50 Signal (MA200/50)
Submitted by Van Beek on January 7, 2011 - 11:09The Moving Averages 200/50 Signal (MA200/50) is one of the most widely used Moving Averages Signals.
The MA200/50 compares the 200-day Moving Average with the 50-day Moving Average.
When the 50-day Moving Average crosses the 200-day Moving Average and ends up above it, you can see this as a “Buy” signal. This is also called the “Golden Cross”. The long-term trend is considered to be “Up” when the 50-day MA is bigger than the 200-day MA.
When the 50-day Moving Average crosses the 200-day Moving Average and ends up below it, you can see this as a “Sell” signal. This is also called the “Death Cross”. The long-term trend is considered to be “Down” when the 50-day MA is smaller than the 200-day MA.
You may expect the MA200/50 to provide you with one of the earliest “Sell” signals when the trend turns down.
Moving Averages Trend Investing Signal (MATI)
Submitted by Van Beek on January 7, 2011 - 11:00The Moving Averages Trend Investing Signal (MATI) is an advanced custom-developed signal.
The MATI uses a number of different Moving Averages and is based on the patterns in and comparisons between these Moving Averages.
When the MATI is “Up”, it signals investors to buy or stay in the market. When the MATI is “Down” it signals investors to sell or stay out of the market.
The MATI is designed to provide an earlier “Up” signal than the other Moving Averages Signals to enable to you step earlier into a bull market (trend “Up”). The side-effect is that the MATI provides occasionally a false signal.
You can only find the MATI at Stock Trend Investing since it is a proprietary, exclusive signal.
See here the latest MATI for the S&P 500.
Moving Averages Signals (MAS)
Submitted by Van Beek on January 7, 2011 - 10:56The Moving Averages Signals (MAS) for a stock market index are based upon the daily closing prices of that index.
Example: The 200 day Moving Average for an Index is the average closing price of that index during the last 200 trading days. Trading days are the days that the stock market was open.
Moving Averages Signals (MAS) often compare the Moving Average for a certain period with the Moving Average for a period of a different length. For example the 200-day Moving Average is compared with the 50-day Moving Average.
When these different moving averages are compared over a certain period of time, they occasionally will cross each other. When they cross depends on the development and fluctuations in the underlying index price. Such a crossover can be seen as a signal for a change in the direction of the trend.
Some Moving Averages Signals (MAS) are standard ones that are widely used. Others are proprietary and custom-developed by specialists.
Overall MTS Trend Expectation for US and Europe
Submitted by Van Beek on January 7, 2011 - 10:51US Market
The Trend Expectation for the US Market is calculated every month based on the Month-end Trend Signal (MTS) analysis for 4 different US stock market indices:
- Dow Jones Industrial Averages
- S&P 500
- NASDAQ
- NYSE
Only by combining the MTS analysis for these 4 indices, we come to the overall MTS Trend Expectation for the US Market.
Major European Markets
In a similar way, the Trend Expectation for the major European markets is calculated every month. In the case of Europe, we use the following indices:
- DAX (Germany)
- FTSE 100 (UK)
- CAC 40 (France)
- AEX (Netherlands)
Only by combining the MTS analysis for these 4 indices, we come to one overall MTS Trend Expectation for these major European Markets.
Month-end Trend Signal (MTS)
Submitted by Van Beek on January 7, 2011 - 10:43The Month-end Trend Signal (MTS) is calculated after the closing of each month. It is based on the pattern in the month-end closing price of a stock market index during the last 6 months.
For each market index, the MTS shows you every month one out of five different statuses:
The Different Trend Signals
Submitted by Van Beek on January 7, 2011 - 10:31At Stock Trend Investing, you find 3 different types of Trend Signals:
- Month-end Trend Signal (MTS)
- Moving Averages Signals (MAS) (there are 3 different Moving Averages Signals)
- Coppock Buy Signal (CBS)
The 3 different Moving Averages Signals (MAS) that we use are:
a) Moving Averages Trend Investing Signal (MATI)
b) Moving Averages 200/50 Signal (MA200/50)
c) Moving Averages 250/100 Signal (MA250/100)
In the following chapters you get the explanation for each of these Signals and how you can use them.
Why would you use different Trend Signals?
Submitted by Van Beek on January 7, 2011 - 10:26Different trend signals analyze the patterns in prices of stock market indices in different ways. Therefore, they do not all generate buy and sell signals at exactly the same time.
Sometimes one signal gives you an earlier indicator for a change in the direction of the trend than another signal. Working with different signal systems can give you then the opportunity to act quicker on new trends. The earlier you can jump onto a new trend by buying or selling funds, the more you can benefit from that trend.
At other times, a single signal can be a false indication and no change in the direction of the trend materializes. When multiple signals start indicating the same trend direction however, you can have more confidence in that observation. As a result you can decide to invest more of your savings to capitalize further on that trend.
What is the reliability of Trend Signals?
Submitted by Van Beek on January 7, 2011 - 10:19Trend Signals try to make a distinction between changes in the direction of the long-term trend and short-term price fluctuations. Even when the long-term trend changes direction only 2 or 3 times during a decade, nobody knows in advance when this will happen.
Years later, it is very easy to see when the long-term trend changed direction. Trend signals are designed to give a reliable indication as soon as possible after a change in the direction of the trend. There is a trade-off here between how soon and how reliable.
When the trend signal comes very late after the actual change in the trend direction, you as an investor will miss a lot of the potential gains. Therefore, the reliability of a trend signal is not 100% since we want signals as early as possible. Thus trend signals may sometimes give indications for a change that later appear to be false.
How to use these Trend Signals?
Submitted by Van Beek on January 7, 2011 - 10:12The long-term market trend changes only occasionally its direction (in most indices only 4 times during the last 20 years). Therefore, you can assume that most of the times the trend will continue in the same direction as is.
When the trend is “Up”, you can expect that the market most likely will continue to go up. When the trend is “Down”, you can expect that the market most likely will continue to go down.
Thus when the trend turns “Up” or is “Up” for a certain market, as a Trend Investor, you want to own index funds or low-cost mutual funds that follow that market index. When the trend turns or is “Down”, you want to be out of these funds.
