Rate of Change on a SMA

rlsintulsa

Greg Morris recently posted an article on Pair Analysis in his BLOG. In his methodology he uses a weekly chart of IJR:IEF ratio with a 2 period SMA of the ratio, and, when the ROC(1) exceeds +4 or -4 it triggers a switch of the pair. The question was asked how do you put an indicator on the SMA and the answer was StockCharts doesn't allow that. However, I built a weekly chart of the ratio IJR:IEF and used a 2 period ROC (ROC(2)) on the ratio. In my opinion this should produce a similar if not exact result. Am I correct in this assumption?

markd

I'm not sure how similar this is, but it seems to produce a lot of whipsaws:

https://stockcharts.com/h-sc/ui?s=IJR:IEF&p=W&yr=5&mn=0&dy=0&id=p6257402018c

You would have to compare each signal to his result. I haven't put that much thought into it, but I don't see why ROC(2) should logically substitute for sma(2) and ROC(1).