Moving Average Indicators for CL

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From the Weekend Report 3/5/2010: Since the previous week the phase of the oscillator around the 200 bar average is almost unchanged.

CL: Recent Averages with Candlestick Chart.

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Different ways of averaging are tested on CL stock prices for their ability to predict trend movements. Techniques available include moving weighted or exponential averages of various periods and the family of MACD (Moving Average Convergence Divergence) indicators.

Unfortunately, some of the most popular indicators of this type can prove to be the worst forcasting indicators. The effectiveness of these methods as applied to CL stock price trend evaluation is tested on the next page.

Green is the 20 bar moving average, while the 200 session average is red. Often the simple unweighted moving averages seen in this plot will give a more accurate indicator, with fewer false signals than some of the supposedly more sophisticated techniques that we test below. Commonly, speculators will use exponential averages or weighting techniques to emphasize the most recent data. But past a certain point, such front weighting can dramatically increase false signals. Norman G. Fosback has noted that legitimate signals of this sort will normally be evident through a variety of averaging methods.

Companies In the News

Thursday, March 18, 2010: We have news on MicroSoft, ticker symbol MSFT. Signs of an over-bought condition have become noticable. Also, there are breaking events concerning Mylan Inc. and Goldman Sachs Group, Inc..

From the News Archive: (3/17/2010 ) Favorable events happened at LoJack Corp and Martha Stewart. Meanwhile, bad news came from Patterson Companies, Inc. and LSI Corporation.

MACD analysis would appear perfect for overtuning, since it may use any of an infinite number of averaging methods and coefficients. In addition to crossover signals from various moving averages, analysts frequently add a trigger line based on some average of the first two averages. Here we depict the results of 12 and 26 session Exponential Moving Averages. The exponential coefficient used here is .18. There is nothing magic about these parameters, but these are frequently seen.

Float the cursor for a longer term chart.

Moving Average Convergence Divergence, or MACD, produces buy or sell signal that are color tinted here.

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Moving Avg. 20/200 Divergence	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 22 instances
Future30SesAvgClose	3.21 % minus 1.33 % = 1.89 %	15.97 %
Future5SesAvgClose	0.99 % minus 0.27 % = 0.73 %	36.94 %
Future2SesAvgClose	0.39 % minus 0.13 % = 0.26 %	32.49 %
Sell Signals - 22 instances
Future30SesAvgClose	0.61 % minus 1.33 % = -0.72 %	-6.11 %
Future5SesAvgClose	0.24 % minus 0.27 % = -0.02 %	-1.17 %
Future2SesAvgClose	0.13 % minus 0.13 % = 0.00 %	0.03 %
	.
Moving Avg. 5/20 Divergence	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 218 instances
Future30SesAvgClose	1.58 % minus 1.33 % = 0.25 %	2.11 %
Future5SesAvgClose	0.38 % minus 0.27 % = 0.11 %	5.62 %
Future2SesAvgClose	0.26 % minus 0.13 % = 0.13 %	16.49 %
Sell Signals - 217 instances
Future30SesAvgClose	1.20 % minus 1.33 % = -0.13 %	-1.08 %
Future5SesAvgClose	0.16 % minus 0.27 % = -0.10 %	-5.28 %
Future2SesAvgClose	0.01 % minus 0.13 % = -0.12 %	-15.38 %
	.
Moving Avg. 5/200 Divergence	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 45 instances
Future30SesAvgClose	3.38 % minus 1.33 % = 2.05 %	17.38 %
Future5SesAvgClose	1.64 % minus 0.27 % = 1.38 %	70.05 %
Future2SesAvgClose	0.76 % minus 0.13 % = 0.62 %	79.36 %
Sell Signals - 45 instances
Future30SesAvgClose	1.35 % minus 1.33 % = 0.02 %	0.18 %
Future5SesAvgClose	0.68 % minus 0.27 % = 0.42 %	21.11 %
Future2SesAvgClose	0.25 % minus 0.13 % = 0.12 %	14.87 %
	.
MACD 12/26 Divergence	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 735 instances
Future30SesAvgClose	1.58 % minus 1.33 % = 0.25 %	2.12 %
Future5SesAvgClose	0.37 % minus 0.27 % = 0.11 %	5.39 %
Future2SesAvgClose	0.17 % minus 0.13 % = 0.04 %	4.89 %
Sell Signals - 735 instances
Future30SesAvgClose	1.64 % minus 1.33 % = 0.31 %	2.61 %
Future5SesAvgClose	0.48 % minus 0.27 % = 0.22 %	10.99 %
Future2SesAvgClose	0.31 % minus 0.13 % = 0.18 %	22.38 %
	.
MACD 12/26 Signal	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 970 instances
Future30SesAvgClose	1.32 % minus 1.33 % = -0.01 %	-0.05 %
Future5SesAvgClose	0.29 % minus 0.27 % = 0.02 %	1.07 %
Future2SesAvgClose	0.17 % minus 0.13 % = 0.04 %	4.98 %
Sell Signals - 970 instances
Future30SesAvgClose	1.26 % minus 1.33 % = -0.07 %	-0.58 %
Future5SesAvgClose	0.19 % minus 0.27 % = -0.08 %	-4.01 %
Future2SesAvgClose	0.15 % minus 0.13 % = 0.01 %	1.73 %
	.
Calibrated M by Q Half Cycle Moving Avg.	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 425 instances
Future30SesAvgClose	1.43 % minus 1.33 % = 0.10 %	0.88 %
Future5SesAvgClose	0.33 % minus 0.27 % = 0.07 %	3.49 %
Future2SesAvgClose	0.14 % minus 0.13 % = 0.01 %	1.12 %
Sell Signals - 424 instances
Future30SesAvgClose	1.77 % minus 1.33 % = 0.44 %	3.76 %
Future5SesAvgClose	0.53 % minus 0.27 % = 0.27 %	13.54 %
Future2SesAvgClose	0.23 % minus 0.13 % = 0.09 %	11.63 %
	.
Calibrated M by Q Full Cycle Moving Avg.	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 299 instances
Future30SesAvgClose	1.08 % minus 1.33 % = -0.25 %	-2.09 %
Future5SesAvgClose	0.15 % minus 0.27 % = -0.11 %	-5.70 %
Future2SesAvgClose	0.03 % minus 0.13 % = -0.10 %	-12.63 %
Sell Signals - 300 instances
Future30SesAvgClose	1.59 % minus 1.33 % = 0.27 %	2.24 %
Future5SesAvgClose	0.49 % minus 0.27 % = 0.23 %	11.62 %
Future2SesAvgClose	0.34 % minus 0.13 % = 0.20 %	25.91 %
	.
Projected Crossing of SMA 20/200.	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 36 instances
Future30SesAvgClose	1.83 % minus 1.33 % = 0.50 %	4.24 %
Future5SesAvgClose	0.91 % minus 0.27 % = 0.64 %	32.61 %
Future2SesAvgClose	0.52 % minus 0.13 % = 0.38 %	48.88 %
Sell Signals - 26 instances
Future30SesAvgClose	0.69 % minus 1.33 % = -0.64 %	-5.40 %
Future5SesAvgClose	0.12 % minus 0.27 % = -0.15 %	-7.61 %
Future2SesAvgClose	0.19 % minus 0.13 % = 0.06 %	7.38 %
	.
Projected Crossing of SMA 5/20.	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 283 instances
Future30SesAvgClose	1.58 % minus 1.33 % = 0.25 %	2.12 %
Future5SesAvgClose	0.65 % minus 0.27 % = 0.38 %	19.54 %
Future2SesAvgClose	0.32 % minus 0.13 % = 0.18 %	23.13 %
Sell Signals - 208 instances
Future30SesAvgClose	1.48 % minus 1.33 % = 0.16 %	1.31 %
Future5SesAvgClose	0.21 % minus 0.27 % = -0.06 %	-2.85 %
Future2SesAvgClose	0.09 % minus 0.13 % = -0.05 %	-5.77 %
	.

The best buy signal for 30 future sessions was 2.05 % from the Moving Avg. 5/200 Divergence,and the best sell signal for was -0.72 % from the Moving Avg. 20/200 Divergence.

For 5 future sessions the best buy signal was 1.38 % from the Moving Avg. 5/200 Divergence,and the best sell signal was -0.15 % from the Projected Crossing of SMA 20/200..

The best buy signal for 2 future sessions was 0.62 % from the Moving Avg. 5/200 Divergence,and the best sell signal was -0.12 % from the Moving Avg. 5/20 Divergence.

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Moving Average Convergence for Colgate-Palmolive Company Stock Prices - CL