MAMA Cross Spotted in Tenneco Automotive (TEN) Shares

Tenneco Automotive (TEN) are in focus today as the charts are revealing that the Mesa Adaptive Moving Average (MAMA) is holding steady above the FAMA, or Fractional Moving Average.  This environment typically indicates that there might be a buying opportunity aligning in technicals.  When there are crossovers between the FAMA and MAMA, the shares are often widely traded.  When the MAMA crosses above the FAMA, it means that the shares are likely to move higher.  Conversely the opposite occurs when the MAMA crosses below the FAMA.  The Mesa Moving Average was first mentioned by John Ehlers in a paper published in a 2001 edition of Technical Analysis of Stocks and Commodities Magazine.  The below was excerpted from the publication,

“The MESA Adaptive Moving Average (MAMA) adapts to price movement based on the rate of change of phase as measured by the Hilbert Transform Discriminator (Technical Analysis of Stocks and Commodities magazine, December 2000). This method features a fast attack average and a slow decay average so that composite average rapidly ratchets behind price changes and holds the average value until the next ratchet occurs.”

As we move into the second half of the year, investors may be focused on portfolio performance over the first part of the year. They may be trying to put all the pieces together in order to create a solid plan that will provide sustained profits, even if market conditions deteriorate. This may involve introducing more diversity into the portfolio. One investor may evaluate a stock completely different than another. It may be important to do the necessary research on the overall industry when searching for the next big winner. As the next round of earnings reporting gets underway, investors will be watching to see which companies are positioned for growth over the foreseeable future. Investors will optimally have all their requisite boxes checked when scouting out the next portfolio moves.

Interested traders may also be keeping an eye on the Williams Percent Range or Williams %R. Williams %R is a popular technical indicator created by Larry Williams to help identify overbought and oversold situations. Investors will commonly use Williams %R in conjunction with other trend indicators to help spot possible stock turning points. Tenneco Automotive (TEN)’s Williams Percent Range or 14 day Williams %R currently sits at -0.95. In general, if the indicator goes above -20, the stock may be considered overbought. Alternately, if the indicator goes below -80, this may point to the stock being oversold.

Another technical indicator that might serve as a powerful resource for measuring trend strength is the Average Directional Index or ADX. The ADX was introduced by J. Welles Wilder in the late 1970’s and it has stood the test of time. The ADX is typically used in conjunction with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to help spot trend direction as well as trend strength. At the time of writing, the 14-day ADX for Tenneco Automotive (TEN) is noted at 23.97. Many technical analysts believe that an ADX value over 25 would suggest a strong trend. A reading under 20 would indicate no trend, and a reading from 20-25 would suggest that there is no clear trend signal.

Investors may use various technical indicators to help spot trends and buy/sell signals. Presently, Tenneco Automotive (TEN) has a 14-day Commodity Channel Index (CCI) of 207.07. The CCI was developed by Donald Lambert. The assumption behind the indicator is that investment instruments move in cycles with highs and lows coming at certain periodic intervals. The original guidelines focused on creating buy/sell signals when the reading moved above +100 or below -100. Traders may also use the reading to identify overbought/oversold conditions.

Taking a look at other technical levels, the 3-day RSI stands at 97.86, the 7-day sits at 89.78 and the 14-day (most common) is at 78.10. The Relative Strength Index (RSI) is an often employed momentum oscillator that is used to measure the speed and change of stock price movements. When charted, the RSI can serve as a visual means to monitor historical and current strength or weakness in a certain market. This measurement is based on closing prices over a specific period of time. As a momentum oscillator, the RSI operates in a set range. This range falls on a scale between 0 and 100. If the RSI is closer to 100, this may indicate a period of stronger momentum. On the flip side, an RSI near 0 may signal weaker momentum. The RSI was originally created by J. Welles Wilder which was introduced in his 1978 book “New Concepts in Technical Trading Systems”.

Keeping an eye on Moving Averages, the 50-day is 9.37, the 200-day is at 21.00, and the 7-day is 10.35 for Tenneco Automotive (TEN). Moving averages have the ability to be used as a powerful indicator for technical stock analysis. Following multiple time frames using moving averages can help investors figure out where the stock has been and help determine where it may be possibly going. The simple moving average is a mathematical calculation that takes the average price (mean) for a given amount of time.

Traders may be looking to capitalize on market trends as we move into the second part of the calendar year. Closely following the technicals might help make sense of current market conditions. Investors may choose to follow many different technical signals, or they may have picked a few popular ones to dedicate themselves to. Whatever the strategy, staying in tune with fundamentals and meaningful economic data may also prove to be highly beneficial. Coming at the equity market from multiple angles may help supply the investor with alternate perspectives that could play a vital role in the next couple of quarters. 

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