Name, Sometimes Called:
SMA(50/200)(volume)
Sometimes abbreviated SMAV
Brief Description:
A positive
development occurs when the 50-day simple moving average (SMA)
of an issue's
daily volume crosses over the 200-day SMA of the issue’s daily
volume.
This is written as
SMA(50)(volume) x+ SMA(200)(volume)
This indicator is no longer positive when the 50-day SMA crosses
under the 200-day SMA:
SMA(50)(volume) x- SMA(200)(volume)
Definitions, Formulas:
To calculate the simple moving averages (SMA)
we use two periods: 50 trading days and 200 trading days.
For this technical analysis indicator (TAI)
we have:
SMA(50)(volume)TODAY = 
The initial value for the sum is volumeTODAY.
SMA(200)(volume)TODAY = 
where
Vi = the daily volume on day i
As above, the initial value for the sum is volumeTODAY.
A positive development for this indicator occurs when SMA(50)(volume)
crosses over SMA(200)(volume)
This indicator is no longer positive when SMA(50)(volume) crosses
under SMA(200)(volume)
Positive Development Calculation:
A new positive development (NPD)
occurs for this technical
analysis indicator (TAI) when SMA(50)(volume) x+ SMA(200)(volume).
This TAI
is no longer positive when SMA(50)(volume) x- SMA(200)(volume)
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
volume 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 volume and is one of a class of lagging
indicators. Lagging indicators tell you what volumes are doing now,
or did in the recent past, so they are useful when stocks are trending.
The word “simple” is used to indicate that each day’s
volume is given equal weight. Not every moving average weights each
day’s volume equally. For other types of moving averages,
see moving averages for the list
and explanations.
This chart shows the SMA(50/200)(volume) indicator for Panera
Bread. Notice that the huge (as in 10-times average volume) spikes
in daily volume have a pronounced effect on the 200 and 50-day moving
averages. Consider the volume volatility before interpreting this
indicator.
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