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First piece of work, rest to follow soon
09
Overshoot Study
Index overshoot study beyond its weekly movingaverages.
By :Harman Bajwa (bajwaharman@yahoo.com)
 
By: Harman Bajwa Stock Overshoot Study bajwaharman@yahoo.com2
IndexTitle Page no:Introduction 2Std Deviation Charts 3Std Dev tables 4Highest/Lowest ever shootout charts 7No: of weeks index was above/below std dev 9S&P 11Dow Jones Industrial Average 14Nasdaq Composite 17Dow Jones Transport Index 20Dow Jones Utility Index 23Dow Jones
 – 
AIG Commodity Index 26Nasdaq Financial 29Nasdaq Bank 32Nasdaq telecommunications Index 35Nasdaq Computers Index 38Conclusion 41
 
By: Harman Bajwa Stock Overshoot Study bajwaharman@yahoo.com3
Stock Overshoot beyond Weekly Moving Averages study
The purpose of this report is to analyse the historical movement of US’s major indexes
beyond their 10 Week Moving Average, 20 Week Moving Average and 40 week movingaverage. Benefit of this study would be:-
 
One can set realistic expectation out of each sector in its each bullish or bearishmove.
 
If the specific sector has over run and is way beyond its historic overshoot, one canthink of going under weight on particular sector. (Definition:- Overshoot is the%age amount the stock has moved beyond its specific moving average)
 
Moving Averages are lagging indicators and if followed we miss near tops to exitand near bottoms to enter. However, if we know the average standard deviationexpected from index, we can be in better position to take a well informed andobjective investment decision.
 
The overshoot %ages, can we kept as an stop loss or profit booking points. It willreduce the variance and increase the returns/trade due to pre-determined lowdeviation entry and exit.
 
One would be saved from wild swings in markets that come once in while ordecades, but once they come they wipe out more than 50% of the value.For the purpose of study, following indexes were taken(Weekly data from -as mentioned -totoday):-
 
DJIA (Jan, 1928)
 
S&P 500 ( Jan, 1950)
 
Nasdaq Composite ( Feb ,1971)
 
Nasdaq Financials ( Jan, 2000)
 
Nasdaq Banking (Oct, 1990)
 
DJ Utility (Jan, 1929)
 
DJ Transport (Oct, 1928)
 
DJ-AIG Commodity (Jan, 1991)
 
Nasdaq telecommunication( May, 1996)
 
Nasdaq Computers( July 1995).
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