Name, Sometimes Called:
SMA(1/49)(price)
Brief Description:
A positive
development occurs when the 1-day simple
moving average (SMA) of an issue's
closing price crosses over the 49-day SMA.
This is written as
SMA(1)(price) x+ SMA(49)(price)
This indicator is no longer positive when the 1-day SMA crosses
under the 49-day SMA
SMA(1)(price) x- SMA(49)(price)
Definitions, Formulas:
To calculate the simple moving averages (SMA)
we use two periods: 49 trading days and one trading day. The 1-day
SMA is just the current day’s closing price.
For this technical analysis indicator (TAI)
we have:
SMA(1)(price)k = Ck,
the closing price for previous day k
SMA(49)(price)k =
where
k = the position of day k in the period
 =
the closing price on day i
A positive development for this indicator occurs when SMA(1)(price)
x+ SMA(49)(price)
This indicator is no longer positive when SMA(1)(price) x- SMA(49)(price).
Positive Development Calculation:
A new positive development (NPD)
occurs for this technical
analysis indicator (TAI) when SMA(1)(price) x+ SMA(49)(price).
This TAI
is no longer positive when SMA(1)(price) x- SMA(49)(price).
If this TAI is still positive tomorrow, it will no longer be new,
but will be a cumulative
positive development (CPD).
If this TAI was a new
positive development (NPD) yesterday, and is still positive
today, then it becomes a cumulative
positive development (CPD).
History:
Simple Moving Averages (SMA) are considered to be among
the simplest, oldest, and most widely used of statistical stock
price analysis methods. As one example, the 200-day SMA has been
used for decades. Averages smooth data and make it easier to spot
trends. A moving average requires data from previous trading periods,
so it lags the price and is one of a class of lagging
indicators. Lagging indicators tell you what prices are doing now,
or in the recent past, so they are useful when stocks are trending.
The word “simple” is used to indicate that each day’s
price is given equal weight. Not every moving average weights each
day’s price equally. For other types of moving averages, see
moving averages for a list and explanations.
This chart shows the SMA(1/49)(price) indicator.
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