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Monday, March 20, 2017 - Weekly e-Newsletter - Issue No. 748

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Economic Calendar
Date
ET
Release
For
Consensus
Prior
Mar 21
8:30 AM
Current Account Balance
Q4
NA
-$113.0B
Mar 22
7:00 AM
MBA Mortgage Applications Index
03/18
NA
NA
Mar 22
7:00 AM
MBA Mortgage Index
03/18
NA
3.1%
Mar 22
9:00 AM
FHFA Housing Price Index
Jan
NA
0.4%
Mar 22
10:00 AM
Existing Home Sales
Feb
NA
5.69M
Mar 22
10:30 AM
Crude Inventories
03/18
NA
-0.2M
Mar 23
8:30 AM
Initial Claims
03/18
NA
241K
Mar 23
8:30 AM
Continuing Claims
03/11
NA
2030K
Mar 23
10:00 AM
New Home Sales
Feb
NA
555K
Mar 23
10:30 AM
Natural Gas Inventories
03/18
NA
-53 bcf
Mar 24
8:30 AM
Durable Orders
Feb
NA
1.8%
Mar 24
8:30 AM
Durable Goods -ex transportation
Feb
NA
-0.2%
 
This Week in History

Mar 20, 1933 - Roosevelt signs the Economy Act into law, slashing federal salaries and shuffling various agencies to preserve nation's fiscal resources

Mar 22, 1765 - British Empire passed the Stamp Act which laid the seeds for rebellion of one of its most profitable colonies, America

Mar 23, 1836 - US Mint began using a steam-powered press to make coins

Mar 24, 1989 - Exxon Valdez tanker hit a reef, causing it to lead 11 million gallons of oil into Prince William Sound

This Week’s Featured Indicator:
Moving Averages

Moving averages are widely used indicators that take into account commodity prices over a given period of time and averaging them out. The indicator attempts to “smooth out” the noisy aspects of price fluctuations in order to reveal “trends” in a steadier and more gradual manner. There are many different types of moving averages, the more common ones being the simple moving average (SMA) and exponential moving average (EMA).

PROS:

  • In trending markets, moving averages can show clearer trend direction than actual price movements.
  • They can be used subjectively as a price threshold determining whether a market is trending up or down.
  • Multiple moving averages can be creatively combined to interpret shorter- to longer-term price trends.

CONS:

  • Because moving averages are lagging indicators, changes or reversals in price trend will occur before such changes are reflected in the moving average.
  • When price trends change, the direction of moving averages can appear contradictory.
  • When viewed in relation to price movements, moving averages can often show multiple price/MA crossover movements (whipsaws*) during flat markets.
  • Shorter moving averages can often generate the same kind of “noise” that they were originally developed to filter out.

*A “whipsaw” is a market condition when price heads in one direction only to reverse quickly in the opposite direction; origin of this term stems from the pull-and-push action used by lumberjacks to cut wood using a saw of the same name.

 

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