How reliable is buying when a rising 200 day ma
appears
to be successfully tested.
Here we assume the 40 wk ma is practically the same as the 200-day
ma.
The
200-day ma is considered broken when it either subsequently declines
more
than 10% or when it then needs to consolidate for 7 months or more.
In
a bull market, there was always at least one successful test of the 200-day
ma.
But it eventually fails. A failure is much more likely, but not guaranteed,
when
the DJI last new high was not confirmed by the weekly A/D Line.
Of
the 9 bull markets where there were at least 3 tests of the 65 dma,
in
7 cases the break occurred only when the A/D Line had failed to confirm the
last
DJI high. Only twice did the 200-day ma not hold up when the A/D Line
had
confirmed the DJI's strength.
Conclusion: We should probably consider the 200-
day ma a point to Buy as long as the
Weekly A/D Line
confirmed the last DJI high. The
first exception, in
mid 1946, took place after an
unmistakeable
head/shoulders had formed. The
other case was in
January and February 1977. In this
case, weekly
A/D Line only marginally confirmed the
DJI high.
In the 2014 case, the weekly A/D Line did
confirm
the DJI high.
1935-1937 1 successful test and then a failure. NYSE A/D Line
failed to confirm the last higH.
>>
1941-1946 3 successful tests and failure.
NYSE A/D Line confirmed all the way up.
>
1949-1950 3 successful tests and failure. NYSE A/D Line
failed to confirm the last high.
>
1954-1956 3 successful tests and failure. NYSE A/D Line failed to confirm the last high.
1958-1960
1 successful test and then a failure.
NYSE A/D Line failed to confirm the last high.
1963-1966
2 successful tests and then a failure.
NYSE A/D Line failed to confirm the last high.
1967
1 successful test and then a failure.
NYSE A/D Line failed to confirm the last high.
1968-1969
2 successful tests and then a failure.
NYSE A/D Line failed to confirm the last high.
1970-1971
1 successful test and then a failure.
NYSE A/D Line failed to confirm the last high.
1972-1973
2 successful tests and then a failure.
NYSE A/D Line failed to confirm the last high.
>>
1975-1976 3 successful tests and failure.
NYSE A/D Line confirmed all the way up.
1983-1984
1 successful test and then a failure.
NYSE A/D Line failed to confirm the last high.
>
1985-1986 3 successful tests and 6 month consolidation. NYSE A/D Line failed to confirm the last high.
>
1986-1987 1 successful tests and failure. NYSE A/D Line
failed to confirm the last high.
>
1988-1990 5 successful tests and failure. NYSE A/D Line
failed to confirm the last high.
1991-1994
2 successful tests (in that the decline did exceed 10%) and then 7 month hesitation.
>
1995-1998
3 successful tests and failure. NYSE A/D
Line failed to confirm the last high.
1999-2000
1 successful test and then a failure.
NYSE A/D Line failed to confirm the last high.
>
2004-2007 7 successful tests and failure. NYSE A/D Line
failed to confirm the last high.
2009-2010 1 successful test and failure.
NYSE A/D Line confirmed all the way up.
2010-2011
1 successful test and failure. NYSE A/D Line confirmed all the way up.
2012-2014
4 successful test and ???????. NYSE A/D Line confirmed all the way up.
Weekly TIGER DJI charts - http://tigersoftware.com/TigerBlogs/May15,2011/index.html
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80-85 is missing |