Be Unmoved by Moving Averages

First thing this morning before we get into the data of the day, and we walk through the zoo and see how the )political( animals are doing, yada, yada, a reader asked a fine question that deserves some thought.

Do I attach any significance to the market when the 50 week moving average (50 dma) moves below the 10 week moving average (10 dma)?

In a word, no.

But let me tell you why: Humans are drawn like flies to whole numbers, round numbers, even numbers, and lots of other numbers.

So it’s not that moving averages do or don’t help. The most certainly do. However, at the core of our approach over on the Peoplenomics.com side of things, we tend to look at numbers that are derived from data rather than the even number fixated 200, 100, 50, 25, 10, and even 5 day moving averages.

It is a time-consuming task that I don’t want to go through again, but if you’d like to replicate a tiny corner of our work, one simple exercise is get thee over to Yahoo and pick historical data for any stock, index, or whatever, of your choice. Might as well pull 20-50 years of daily data in order to have a decent basis.

Next what you do is set up three columns in the spreadsheet.

Column 1 is the closing price for that day (or week if you’re lazy).

Column 2 is the XX moving average. This is the one where you build the formulae so that you can plug in a single number (lik 13 weeks, and that is only an example because there are four such periods in a year, and because in real-life (IRL) companies report quarterly, yeah?

Then you set up another set of data (Column 3) and you set it so you can have a different moving average period.

Let’s say in this column, we have a 9 month average which means 3 of the quarterlies or 39 weeks.

Then, when the one is above the other, you look on the charts and see which one of your test cases gives you the optimum timing signal.

This isn’t that difficult and it’s pretty easy – when you don’t drink the Kool-Aid with the rest of the crowd to actually find some meaningful insights.

Because you know what?

Americans these days are so effing used to “off the shelf, one-size fits all” solutions, that we gobble up pre-packaged solutions and scarf them down like we were hungry beggars.

We are not – at least around here.

Instead, we praise human inventiveness and hold in extremely high regard a) people who don’t take off the shelf ideas and above them are b) the people who have the sense to ask “Why did they use THAT number…”

Logic isn’t something that is particularly in vogue right now. But when you learn to think through very questioning filters (Why are they doing such and such THAT way…) then you are on the road to being an autonomous human.

Off the shelf works for the thought-limited humans.

Not folks like us.

We derive to thrive.

If you can’t derive for yourself (from raw data like intraday and closing prices and volume) don’t use the indicator because it’s like driving a car without knowing how the engine works.

Oh, sure, you may be able to drive 100,000 miles in it without lifting the hood. But maybe not…and it helps to understand how the car works. Similarly, it helps to look at things like moving averages and such and derivce your own numbers. Once you have some good candidates, paper trade it for a while. As its track record begins to exceed that turned in by the off-the-shelf, you can trade with more confidence.

In the end, like any good journeyman, you will at some point come up with customizations that will make the most possible sense to how you look at news, markets, and the whole conglomeration of Life. And what works for you probably won’t work for me, but it will for you. That’s because everyone’s wiring between the visual cortex and other parts of brain are wired differently by genetics and socialization. You will see that which I don’t and visa versa.

So how do you tell Who’s right? Your bank, trading account balance, and how much you have to send IRS quarterly should be hints.

Meantime, Back at the Zoo

Some home sales data will be out in a couple of hours. Richmond Fed data, too.

On my To-Do list today is another eye doctor visit, surgery Thursday, but when I get back from the eye doc, depending on how things go, I’ll be doing a monthly data overview for Peoplenomics tomorrow. Charts only this Saurday and hopefully in a week or two, I will be able to get off the magnifier tools and be able to drill better again into the fine print.

Playing the market is – in some ways – like reading a financial statement. Lots of people take those and dutifully read the whole thing. Me? I skip right to the Notes to the Financial Statement and read all that fine print because you’ll normally find out more from the Notes than from any other part of it.

Sane thing applies in the week after options. The investing crowd by this time of the month is usually reduced to looking at fine print, too.

Not wanting to upset balance in the Universe, we will do so, as well.

At the Zoo: Wild Idiots

Now, over here, in this part of the zoo, we will look at elephants and jack-asses.

Speaking of the latter: Clinton allies blame Bernie for bad polls.”

Yep, no sneaking anything past these rocket surgeons.

Ostrich Cage

Barrack Obama may be able to read the Constitution, but in terms of remembering much else out of history, we see the workings of the State Department’s Nasty Nest of Neocons at work, building another Ukraine mess with the promises of arms to Vietnam.

He has the audacity to talk about Vietnam’s sovereignty yet we bomb the shit out of Syria?  Doesn’t he get that people can read through bullshit?

As troubling are headlines like “As Obama Presses Vietnam on Rights, Activists Are Barred From Meeting,” This is the “quick, look surprised” part.

Obamas track to ruin America (and set up future wars) is clear in other data, as well…data that the libbies would just as soon scream I was wrong about 4-months ago when I said it was coming, but oh, where are they now?

Pandering to NE liberals, we see media headlines like “Record immigration expected to slow but where were said media hypes…I mean types when it was and is still going on?

Where are the editorial boards voicing outrage at the tolerance policy which fails to enforce existing laws on the books, and where, for heavens sake, is the apology from the libs from getting it so wrong?

The ONLY reason, as I explained months back – is you can’t take people who illegally sneak into America and stick them in a “classification as pending decision” and say they aren’t illegal based on the made-up BS of classification.

That, fellow patriot, is what mush-mindedness is about. If someone hasn’t come in through a border checkpoint, they are what?

Oh…right…silly me.

Unclassified…why of course!

Obama Marketing Muslims

By the way, if you want to skip over the border-runners and people being vetted, the quickest way to infiltrate America is to convert to Islam.

At least that’s one takeaway from the headline “”Of 529 Syrian Refugees Received By US This Month, None Are Christian.”

OK, pop quiz.

Is this good policy or bad president?

(Betcha can’t guess my answer. I’m the guy who LOVE LEGAL IMMIGRANTS who come on their own volition and want to be in History’s Greatest Melting Pot. But people who haven’t been vetted and are running from a war we started…no, thank you. That kind of crooked economic growth we can do without, thank you. During the Great Depression, it was a “chicken in every pot.” Going into our next one, it’s a mosque in every town. Can we skip ahead and roll with some Buddhist immigrants?)

Dems to Run on Wreckord

Latest little twist for the dems to paper-over: “Politics|House to Consider IRS Commissioner’s Impeachment.”

But this is a minor speed bump in articles like Why Hillary Clinton is sinking faster than the Titanic.

And now that the governor of Virginia and ex demo heavy amd Clinton pal is being investigated by the Feds…the wreckage should be all over the field by Election Day.

Gory details in the Washington’s Toast this morning.

Last, but not least, we stop the zoo tour this morning at the primate house.

Here, we see how Bernie is pre-feeding a replay of Chicago in 1968’s convention by forecasting things will be “messy.”

Word for the Day

Yes, just like the unkempt day at the zoo, our Nostracodeus scan of the news tells us the meme—word of the day is Mess.

It runs from Shasta Lake to Madonna to Bernie, with other stops along the way. Here’s the search you can run without our code.

Mess.

It’s what the world is this morning…

Still.

If you disagree with our assessment, go ahead and use the comment section, although these are human moderated.

Just remember, if you don’t already know it, much of what you think has been pre-programmed by social media and some very ugly social engineers including some who work for your government.

And our tip of the iceberg story for the day is “Facebook admits rogue employees may have shown bias .”

And I would bet a nickel on the side our own government is social engineering and may have even had a hand in building ISIS from the ground up.  You never know where rogue goes.

Or, did you forget the story from 10-years back about how the government was looking for “identity management software” so govt tools could be govt trolls?

More Recent Flashback: I’m not so worried about the “Top 14 Government Social Media Initiatives Government Social Media Initiatives” even though it is thought control and lobbying…

It’s the off-books apps we don’t know about that scare me. Government seems to have gone down the path of thought control whether you like the idea, or not.

Would Orwell have had a social media account?  Kafka?