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Moving Linear Regression
Greatest Annual Percent Fall In The Dow Jones
The biggest annual decline in the Dow Jones Industrial
Average took place when the average closed at 77.90 points
on December 31, 1931. This was 52.6% lower than at the beginning
of the year.
There are lots of possibilities for using a moving linear regression but the most common is when it crosses some other average.
As an example, set up your charts with a 12 period simple moving average of the highs and a 12 period simple moving average of the lows. Then set the moving linear regression to 21.
When the 21 period moving linear regression crosses above the 12 period moving average of the highs, that creates a buy signal. When the 21 period linear regression crosses below the 12 period simple moving average of the highs, that is the exit. The opposite is true for short trades. Have a look at the next chart.
The disadvantage of using the moving linear regression is that unless you use some kind of filter, it is prone to a lot of whipsaw. The little 12 period channel helps take some of that away but you could also experiment with using RSI, MACD or stochastic as a filter.
Economic Calendar Terms
Producer Price Index measures prices of goods at the wholesale level. The three main categories that make up the PPI are: crude, intermediate, and finished, the most important of which is the finished goods index. This is the price of goods that are ready for sale to the user.
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