A Qualitative and Quantitative Look at GE (as of 1-16-2008)
Below is the CPMAR (current price to moving average ratio) for GE. A
CPMAR value of less than 1 indicates that the current price is less
than the (ten day) moving average. If the CPMAR = 1 then the moving
average and the current price are equal. Finally, if the CPMAR is
greater than 1 then the current price is greater than the moving
average.
Fig.1
All
averages are tracked on a 10 Day Moving Average Basis.
ARPC = Average Relative Price Change
ARPA = Average Relative Price Acceleration
Fig.2
For an explanation of Relative Price Change and Relative Price
Acceleration go to
http://www.intelrap.com/mathfinance1.html
Later we will discuss how these graphical (and quantitative) tools can help
us to make qualitative estimates of the tendency of a stock price (GE in
this case) to “revert to the mean”. Still later we will present quantitative
forecast models.