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Chart Descriptions
Annual Inflation Rate
The Annual
Inflation chart
is updated
monthly based upon the CPI-U and provides a graphical
representation of the current status of inflation. It makes spotting
trends in inflation easy. Is inflation rising or falling? This chart
will tell you. We have recently added a new trend line
called Linear Regression.
Rate of Change Charts (ROC)
As their name implies ROC charts plot the annual rate of change
of the price of the index. So in an instant we can know how much
the market is up or down over the last year. When we view a normal
price chart we can only guess whether the market looks like it is
up over the last year. Have you ever thought, "Well its been
up a bit then down and now I think it is back up, well maybe it's
down?"
With the ROC chart we can look at a given date and know that on
that date the market was up 20% over the previous year. The chart
doesn't tell you how much the market is up over the last 13 months
or 18 months or 6 months. It does however clearly show where we
are compared to a year ago.
It also generates very accurate
buy and sell signals for long term investors. This is because it
is not displaying the price level but the rate of return. If the
rate of return is in a definite uptrend the stock is a
"Buy". If the Rate of Return is falling it is a
"Sell".
Crossing the moving Average line is the indicator for a change in
direction.
The ROC is calculated
by taking the price of the index today and subtracting the index
of one year ago. This gives you the actual amount of increase or
decrease from a year ago by dividing the result by the index from
a year ago you get the percentage of increase or decrease which
is plotted on a monthly basis.
We track two Rate of Change Charts the NYSE-
ROC and the NASDAQ-ROC
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The Moore Inflation Predictor (MIP)
The Moore Inflation Predictor (MIP) Chart is a highly accurate graphical
representation of the future direction of the inflation rate. It
has a 97%+ accuracy rate on direction & turning points. And
over 90% of the time the rate falls within the projected "likely"
range and 7% of the time it falls within the "possible"
range.
By watching the turning points, we can profit from inflation hedges
when the rate is trending up and from Bonds when the rate is trending
down. In addition it could be used to judge whether to lock in a
mortgage rate or wait a month or two for a better rate.
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