Moving Average Primer, Opining on TIBX
When the 50 day EMA and 200 day EMA start to get closer to each other
for a stock, is that a positive sign that the stock will go higher or
is it a negative indicator and will push the stock back further until
something positive will let it break through the 200 day EMA. The
reason I ask, is because I hold a position in a stock that simply
refuses to break the 200 day EMA but has been going back and fourth
through the 50 day EMA for several months. Would you lighten up on
this position?
It's usually considered a bullish sign when the 50-dma moves crosses the
200-dma, at least for establishing longer-term trends. Just getting
close, though, is not enough. For short-term trading, two popular
combinations are the 5 and 20 day averages and the 10 and 50 day
average. Buy signals are usually issued when the 5-day crosses above
the 20-day and when the 10-day crosses above the 50-day. Conversely,
sell signals are issued when the 5-day falls below the 20-day and when
the 10-day falls below the 50-day.
As for lightening up your position, since we have no idea what the
fundamentals or technicals are on your particular stock, we're not in a
position to give buy/sell advice.
Hi Splittrader, I would like to say thanks very much for all your past tutoring. Plus,
I have a question. With the sec report on TIBX, the company appears
to be saying we wont survive, but do you see the slightest hope for a
price rise. Matilda
Thanks for writing, Matilda. Unfortunately, things aren't looking good
for TIBCO Software (TIBX). As we're sure you're aware, the stock has
dropped $30 over the past month, so we are not looking for a quick
turnaround. Adding insult to injury, yesterday the company said it
expects earnings per share to be about break-even, which is
considerably less than the First Call estimate for $0.07.
Despite the bad earnings news, we think that TIBCO should be able to
hang on. The company has a solid balance sheet with more than $500
million in the till, so we think they should be able to survive the
current economic slowdown. And as long as TIBCO can survive, there's
always a chance its stock will come back. However, we feel save in
saying the the glory days of a $100 share price are history.
