Algabraic formula

[QUIKTDR]

It has been a long time since I took algebra.

I am looking at two formulas and I am trying to figure out what they are trying to calculate?


1) subtracting one moving average from another (MA3 -MA13) = ???


and 2) dividing that answer by another moving average (MA5) = ???

Thank you in advance!

 

[wjm11]

1) subtracting one moving average from another (MA3 -MA13) = ???

Some people use moving averages plots to see trends that stock prices are following. Subtracting one moving average from another (say a 50-day from a 100-day) would allow you to see if these values are converging (as the difference approaches zero) and might be about to cross. Some people make buying and selling decisions on such bases.

I am not sure what the knowledge would be gained by dividing the difference by yet another moving average.

 

[QUIKTDR]

THANK YOU FOR YOUR PROMPT REPLY!