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Stephen J. Kelley Relative
Strength
Relative
Strength
Moving
Averages
MAC-D MAC-D
Figure 19: Tactical buy-sell signals
The red vertical lines indicate sell signals, the green lines are
buys. These red and green signals are caused by many factors,
three of which are reflected on this chart. The top section is
relative strength. When the market gets over-heated, it’s
reflected by the green peaks. This might indicate a sell signal.
When the red valleys appear, the market is undervalued and a
buy signal might result.
The other two signals have to do with rolling averages and
volume. It’s hard to see, but there are red and blue lines in the
“Moving Average” section. When the short-term moving
averages eclipse the longer-term averages, the market is once
again over-heated, and a sell signal may result.
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