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Morning all.
Update of the chart I posted on Sunday evening.
It's panning out true to form. Pity the Asian rally
caused the gap open yesterday that took the majority
of the move.

Need to watch for when the 20Ma crosses up above the 40ma
and the Macd starts to peak. This has, in the past, called a top.
Doesn't mean it will this time, but it has up to now.

Took advantage of the slight pullback we had to take a couple of
stock longs. Will follow these up with the chart action and look
to take profit and reverse into Index shorts if the chart runs true.

No doubt it won't. Nothing is ever that simple, is it. :-(

Melnibone.

Morning (just) all

Melnibone - I know this shows my lack of knowledge, so don't worry
you don't have to be tactful (!lol) but the above chart looks very
interesting except my ability to make sense of the abbreviations used
is nil, so it's true information is completely lost on me. I am sure there
are probably others maybe too shy to admit they don't understand either, who would also be interested to understand more. So would you post the meanings of the abbreviations...please...if you have a spare moment...

stockbunny It is a FTSE chart six monthly (6M).
MA20, MA40 and MA200 are 20,40 and 200 day simple moving averages.
They are plotted in their respective colours.
The smaller window below shows a MACD (moving average convergence/divergence)
histogram using the 26 and 12 day moving averages. I believe there should be
a 9 day moving average of the MACD used as a trigger. However I don't know
what the two plots (blue and green?) plotted over the MACD are. It doesn't
really matter as you can see that when they cross the trend on the FTSE
has changed.
If the 26 and 12 day moving averages were plotted on the price chart you
would see that they cross each other where the MACD histogram crosses above
and below zero. The peaks and troughs on the histogram show where the 26 and
12 day moving averages converge and diverge.
Plot a chart with the same time frame but put a 12 and 26 ma on it and the 12 and 26 day macd and you will see what I mean. Hang on I will try it.

Hmm...well maybe it isn't as I suggested. I'm sure i've got the general idea
but maybe not the detail.
Help Melnibone!

Sorry not to answer sooner, Stockbunny, but I've been
cooking dinner.

I see Snoball has stepped into the breach and answered your questions.

By the way, never be sorry for not knowing something.
We all know something, but we all Don't know an aweful lot more!

You never stop learning something new in this game. And sometimes
you find out that you've been misinterpreting something, that you
thought you knew, for years.

I think that a lot of the technical indicators are lagging indicators
by their very nature. Think about it, they are telling you the history.
The space to the right of any chart is virgin white, ready for the
future to be written.

That's why I try and pre-empt some indicators as to their likely
direction. That's why I said that I look for the top of any move to
be forming when the 20Ma moves up through the 40Ma. On the face of it,
it should be Bullish, but what it is actually doing is playing catch-up
after the event. Think about it, it can't precede a move because it is
actually tracking what has already occured. The price action has already
happened and the Ma is just lagging behind, recording what has already
happened in real time. I look for the move to occur when the price is
moving up through the 20Ma towards the 40Ma.

This is what I believe happens in ranging markets. You would need to
re-evaluate and reassess for a trending market, IMHO.

I'll probably get Bazookered now by hordes of TA experts, for heresy.
But there you go. Accept nothing and question everything is my way
of doing things.

Melnibone.

I can't remember where I copied this from when I first started
learning about TA, but here is a concise explanation of the Macd
and its interpretation.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
The MACD ("Moving Average Convergence/Divergence") is a trend following momentum indicator that shows the relationship between two moving averages of prices. The MACD was developed by Gerald Appel, publisher of Systems and Forecasts.


The MACD is the difference between a 26-day and 12-day exponential moving average. A 9-day exponential moving average, called the "signal" (or "trigger") line is plotted on top of the MACD to show buy/sell opportunities.

The basic MACD trading rule is to sell when the MACD falls below its signal line. Similarly, a buy signal occurs when the MACD rises above its signal line. It is also popular to buy/sell when the MACD goes above/below zero.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Hope that helps. Set it up on a chart and follow it through testing
for its efficacy. That's the best way to learn, IMHO. Don't accept
what folk say, check it out for yourself. You'll never get conned that way.

Melnibone.

Here you go, Stockbunny. I know you are a WLW fan. Check out the price
action and the Macd for the past 6 months.

Middle of Jan and the price peaks at 47.5p.
Note the Macd, the Blue line on the bottom chart. It peaks at the same
time.
It then crosses through the green signal line and then through the zero
line and keeps dropping.
The price falls to 39.5p before the Macd stops dropping and turns.
Beginning of Feb and the Blue Macd line crosses up through its green
signal line.
The price rises to 43.5p as the Macd squeezes back above the zero line
and starts to topple again.

It trends down again to 38p in April, with a few range bounces along
the way which are captured by the Macd and its signal line.

Since then, the Macd and the price have trended up, without dropping
back below the green signal, up to the present day.

Now you need to look at the Ma's on the main chart and see if they could
have helped you trade the dips and peaks along the way.

Happy investigating. :-))

Melnibone.

Melnibone:
How are you I hope fine and the Holiday was good. So now u r back with Batteries reacharged. Very good chart and explanations -very useful for everyone and as u say if u dont put your hand up and say please can u help and explain than u never know.

rgds
zarif

Hi, Zarif.
I'm in fine fettle thanks.
31'st wedding anniversary tomorrow, so I've been out buying
Mrs. Melnibone some trinkets today.
Doesn't seem that long, it's hard to believe.
I'm 53 but I still feel like I'm forty and most folk
won't believe I'm over forty when I tell 'em.

Mebbe it's all that Marathon fun running I did in my late
20's and 30's. It certainly fittened me up and knocked
years off my physical body and waistline. :-)
The waistline has put on a couple of inches now, mind. :-(
It does when you stop.

Musing on whether to open a short on the NDX, or wait until/if
it topples.

Melnibone.

If anyone needs to understand TA try these sites.

http://www.equis.com/Education/TAAZ/

http://stockcharts.com/index.html

"God" is on the second one!

Al
;-)

Thanks for that Al.

Just had a look at your favoured second site and it is
a mine of information and charts.

Think I'll be spending a few hours on that one, in the future,
checking out if my own views coincide with theirs. :-)

Melnibone.

Melnibone.

The God I refer to is Murphy. His book is considered the bible of TA, but is large and can be hard going - you won't get to grips with it quickly as it covers everything. My advice is to keep it simple at first using MA's and probably MCAD and RSI along with trends (channels) and support/resistance. That's all I use now. Tried all the complex stuff and it just confused me.

Keep it simple!!!

Another bit of advice is really understand what each does before trading with it. If you don't know what it's showing it can do more harm than good.

Don't often post in the Investors' Room, but hope it helps.

Al
;-)

Much apreciated Big A. Stockcharts.com do some really excellent charts
and indicators that don't appear in the usual list of TA indicators.
Here's a list of them for anyone interested.
http://stockcharts.com/charts/catalog/09.html

Here's one I like.
The Bullish Percent Index.
The Bullish Percent Index (BPI) is a popular market breadth indicator that is calculated by dividing the number of stocks in a given group (an exchange, an industry, etc.) that are currently trading with Point and Figure buy signals, by the total number of stocks in that group. Bullish Percent levels that are above 70% are considered overbought, whereas levels below 30% are considered oversold. Strong buy signals occur when the Bullish Percent Index falls below 30% and then reverses up by at least 6%. Conversely, promising sell signals occur when it goes above 70%, and then reverses down by at least 6%. It is important to note that the Bullish Percent Index is not something that can be applied to a single stock but rather an index that is calculated for a group of stocks. The most popular version of this chart is the NYSE Bullish Percent ($BPNYA) which is mentioned prominently in Thomas Dorsey's book, Point & Figure Charting however it is important to remember that the Bullish Percent index can be calculated for any grouping of stocks.