Moving Average Analysis of KBH

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From the Weekend Report 11/5/2010: Closing the gap with the 200 bar moving average a bit last week, KBH would appear to have reached phase 4 of the oscillation cycle. It is -10.00 % under the line.

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This page looks at the predictive abilities of different methods of averaging applied to KBH stock prices. 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 KBH stock price trend evaluation is tested on the next page.

Red is the 200 bar SMA and Green is the 20 bar average. The Simple Moving Averages above are un-weighted. While unsophisticated, they frequently yield better results than some of the more highly tuned methods examined in following sections. 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 Fosback pointed out that a legitimate signal should be one that is clearly evident through a variety of averaging methods.

	Companies In the News
	In the news, Monday, November 15, 2010: A favorable condition has developed with Sprint Nextel Corporation, ticker symbol S. Also, there are breaking events concerning Abbott Laboratories (ABT) and Cree, Inc. (CREE)

MACD analysis can use any of an infinite number of averaging methods and coefficients. Also, many analysts add a trigger line which is 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 - 26 instances
Future30SesAvgClose	-0.95 % minus 1.34 % = -2.29 %	-19.39 %
Future5SesAvgClose	-1.24 % minus 0.28 % = -1.52 %	-77.22 %
Future2SesAvgClose	-0.89 % minus 0.14 % = -1.03 %	-130.18 %
Sell Signals - 25 instances
Future30SesAvgClose	0.41 % minus 1.34 % = -0.93 %	-7.86 %
Future5SesAvgClose	-0.68 % minus 0.28 % = -0.95 %	-48.50 %
Future2SesAvgClose	-0.65 % minus 0.14 % = -0.79 %	-99.72 %
	.
Moving Avg. 5/20 Divergence	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 166 instances
Future30SesAvgClose	1.86 % minus 1.34 % = 0.52 %	4.39 %
Future5SesAvgClose	0.12 % minus 0.28 % = -0.16 %	-8.26 %
Future2SesAvgClose	-0.10 % minus 0.14 % = -0.24 %	-30.84 %
Sell Signals - 166 instances
Future30SesAvgClose	0.92 % minus 1.34 % = -0.42 %	-3.53 %
Future5SesAvgClose	0.13 % minus 0.28 % = -0.15 %	-7.42 %
Future2SesAvgClose	-0.07 % minus 0.14 % = -0.21 %	-26.41 %
	.
Moving Avg. 5/200 Divergence	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 51 instances
Future30SesAvgClose	-1.66 % minus 1.34 % = -3.00 %	-25.37 %
Future5SesAvgClose	-0.50 % minus 0.28 % = -0.77 %	-39.34 %
Future2SesAvgClose	0.00 % minus 0.14 % = -0.14 %	-18.02 %
Sell Signals - 50 instances
Future30SesAvgClose	-1.75 % minus 1.34 % = -3.09 %	-26.14 %
Future5SesAvgClose	-1.01 % minus 0.28 % = -1.28 %	-65.25 %
Future2SesAvgClose	-0.74 % minus 0.14 % = -0.88 %	-111.28 %
	.
MACD 12/26 Divergence	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 556 instances
Future30SesAvgClose	1.40 % minus 1.34 % = 0.06 %	0.53 %
Future5SesAvgClose	0.32 % minus 0.28 % = 0.04 %	2.23 %
Future2SesAvgClose	0.12 % minus 0.14 % = -0.02 %	-2.85 %
Sell Signals - 557 instances
Future30SesAvgClose	1.34 % minus 1.34 % = 0.00 %	-0.02 %
Future5SesAvgClose	0.24 % minus 0.28 % = -0.04 %	-2.03 %
Future2SesAvgClose	0.11 % minus 0.14 % = -0.03 %	-3.58 %
	.
MACD 12/26 Signal	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 705 instances
Future30SesAvgClose	1.46 % minus 1.34 % = 0.12 %	1.03 %
Future5SesAvgClose	0.25 % minus 0.28 % = -0.03 %	-1.35 %
Future2SesAvgClose	0.09 % minus 0.14 % = -0.05 %	-6.61 %
Sell Signals - 705 instances
Future30SesAvgClose	1.70 % minus 1.34 % = 0.36 %	3.07 %
Future5SesAvgClose	0.29 % minus 0.28 % = 0.02 %	0.86 %
Future2SesAvgClose	0.21 % minus 0.14 % = 0.07 %	9.01 %
	.
Calibrated M by Q Half Cycle Moving Avg.	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 311 instances
Future30SesAvgClose	1.64 % minus 1.34 % = 0.31 %	2.59 %
Future5SesAvgClose	0.57 % minus 0.28 % = 0.29 %	14.74 %
Future2SesAvgClose	0.40 % minus 0.14 % = 0.26 %	32.69 %
Sell Signals - 311 instances
Future30SesAvgClose	1.76 % minus 1.34 % = 0.42 %	3.60 %
Future5SesAvgClose	0.19 % minus 0.28 % = -0.08 %	-4.26 %
Future2SesAvgClose	0.03 % minus 0.14 % = -0.11 %	-14.39 %
	.
Calibrated M by Q Full Cycle Moving Avg.	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 202 instances
Future30SesAvgClose	0.08 % minus 1.34 % = -1.26 %	-10.68 %
Future5SesAvgClose	0.43 % minus 0.28 % = 0.15 %	7.64 %
Future2SesAvgClose	0.54 % minus 0.14 % = 0.41 %	51.58 %
Sell Signals - 202 instances
Future30SesAvgClose	-0.02 % minus 1.34 % = -1.36 %	-11.50 %
Future5SesAvgClose	0.39 % minus 0.28 % = 0.11 %	5.77 %
Future2SesAvgClose	0.28 % minus 0.14 % = 0.14 %	17.56 %
	.
Projected Crossing of SMA 20/200.	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 37 instances
Future30SesAvgClose	-1.88 % minus 1.34 % = -3.22 %	-27.26 %
Future5SesAvgClose	-0.31 % minus 0.28 % = -0.59 %	-30.03 %
Future2SesAvgClose	-0.30 % minus 0.14 % = -0.44 %	-55.55 %
Sell Signals - 31 instances
Future30SesAvgClose	1.75 % minus 1.34 % = 0.41 %	3.45 %
Future5SesAvgClose	-0.66 % minus 0.28 % = -0.94 %	-47.82 %
Future2SesAvgClose	-0.56 % minus 0.14 % = -0.70 %	-89.19 %
	.
Projected Crossing of SMA 5/20.	Signaled Appreciation minus non-signaled Appreciation	Annualized %
Buy Signals - 193 instances
Future30SesAvgClose	2.81 % minus 1.34 % = 1.48 %	12.50 %
Future5SesAvgClose	0.88 % minus 0.28 % = 0.60 %	30.71 %
Future2SesAvgClose	0.43 % minus 0.14 % = 0.29 %	37.14 %
Sell Signals - 185 instances
Future30SesAvgClose	0.01 % minus 1.34 % = -1.33 %	-11.23 %
Future5SesAvgClose	-0.03 % minus 0.28 % = -0.31 %	-15.78 %
Future2SesAvgClose	0.09 % minus 0.14 % = -0.05 %	-6.68 %
	.

The best buy signal for 30 future sessions was 1.48 % from the Projected Crossing of SMA 5/20.,and the best sell signal for was -3.09 % from the Moving Avg. 5/200 Divergence.

For 5 future sessions the best buy signal was 0.60 % from the Projected Crossing of SMA 5/20.,and the best sell signal was -1.28 % from the Moving Avg. 5/200 Divergence.

The best buy signal for 2 future sessions was 0.41 % from the Calibrated M by Q Full Cycle Moving Avg.,and the best sell signal was -0.88 % from the Moving Avg. 5/200 Divergence.

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