actio-et-reactio
Balance is but a brief transition between extremes.
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Sunday, January 18, 2004
Monthly SPX observation using PPRO
The purpose of this chart is to show that a cross ABOVE the Zero line is a more powerful indicator of a SUSTAINABLE rally. Much is being made of this run to the mid-1990s run. Aside from fundamentals, of which there are more than a few differences, this one difference is, IMO, considerable. Note that the current run was off a cross BELOW Zero, where PPRO (a percentage-based MACD) remains. A reversal below that crucial zero cross would validate the view that this has been a so-called "bear market rally". On the other hand, a continued climb up, of course, sets up a bullish Zero cross, from which continued bullish gains can be made. This already happened on a PPRO using shorter MA settings, where a hook at this point would also signal a correction, albeit on a relatively glacial monthly scale.
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Labels: indicators
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
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