Numbers,Stats and Averages

The football is a major event in America.  As I watch the Superbowl the commentators are going over all the details of the players like who they are, where there from, how many yards they run or the number of passes thrown or injuries.  Looking at all the numbers and information you can almost predict which team will win based on current conditions.  Football or any other sport has numerical  statistics.  This raw data can be charted on a graph creating a better visual on the past performance in real time.  I’m pretty  sure there is a few graphs out in the web on sports stats.  Which can help you win on fantasy football or sports betting every week.   However this blog is about the stock market, how to predict the direction.

As a stock trader graphs are one of the tools used to determine which way the stock will go up or down.  One chart I like is the simple moving average (SMA). definition

Definition of ‘Simple Moving Average – SMA
A simple, or arithmetic, moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. Short-term averages respond quickly to changes in the price of the underlying, while long-term averages are slow to react.

Read more: http://www.investopedia.com/terms/s/sma.asp#ixzz1lgP8m81E

The SMA  must be used with the price of the stock.  The closing price of the stock is the 1st chart and the SMA is the 2nd chart.  Therefore your using really two charts overlapping each other.   If the SMA is below the closing price then the stock is going up and if the SMA is above the stock price then the stock is going down.  The SMA is only one element on the direction of the stock, there are other variables but this is a start in predicting which stock  has a better chance of winning.

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This entry was posted in Economics, Education, Technical Analysis and tagged , , , , . Bookmark the permalink.

One Response to Numbers,Stats and Averages

  1. hi91977 says:

    This is very informative. Image what would happen if 3 Simple Moving Averages (SMAs) were applied / superimposed onto the price of the stock–say 30-day, 60-day, and 90-day SMAs–over a 5 year period? I’m sure a seasonal trend would be found.

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