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Long term moving average crossovers – they take a long time

August 12, 2013

My long term moving average crossover method looks for price or pair charts where there has been no moving average crossover for over four years. These crosses show long term changes but are not a timing tool.

In April, I showed Washington Post (WPO) v SPDR Consumer Discretionary (XLY) with a long term base crossover. This pair has a 18.8% gain since then.

Washington Post (WPO) v SPDR Consumer Discretionary (XLY)

Even so, the pair fell for one month before taking off. Meanwhile, the pair of Kimco (KIM) v Post Properities (PPS), shown in March, has been higher and lower and now is little changed, all within its long term base.

These set ups are therefore best suited to long term asset allocations than to trades, for which I prefer defined set ups being met by the best stock candidates.

One possibility is using a Bollinger Band breakout method on consolidations above bases. I tried this on the sector pair of chart of Philadelphia Banks Index (BKX) vs. S&P Railroads Index last year, without a conclusive breakout occurring.

That was a daily chart, and my Bollinger Band criteria require the tightest bands in three years on the weekly chart to have the best chance of working. I will use those criteria now to try to form a practical trade from these long term moving average crossovers.

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