eSology

hep peeps,

To my way of thinking, the macd is not a very valuable indicator in anything but a TRENDING market, be that up or down. it is a POOR indicator for showing when a stock is coming off the bottom or topping, for instance, because the stock was probably ranging at its base or top linear for a while ! its primary purpose in my analysis is to see WHAT SIDE OF THE MARKET THE STOCK IS PRESENTLY AT. in other words, if the stock is going up, but the macd is below zero and sort of loaging along, your longs tend to fall short of full fledged rallies and become more "pops". reverse that process for shorts !

if a stock is trending and the macd was ABVE THE ZERO LINE, more winners result if the dips do not take the macd BELOW that zero line. And a secret from the vault is -- if on the indicator panel, there is MORE room ABOVE zero than below and the MACD is crossing zero, there will "probably" be a larger rally than normal. in other words, more headroom above zero than below and MORE RALLY ! (check it out)

what is very handy is to look back at a stocks history and note where the histogram and the macd were when the stock rallied -- one can then "assume" that the stock will most likely act the same way. there will be exceptions, as there is in everything, but in this case the exception is NOT the rule !

as a review, also note that AS THE MACD AND ITS SIGNAL LINE GROW APART, THE INDICATION IS ONE OF CONTINUED STRENGTH (until they get VERY far apart --- thats like overbought and the stock will usually move downwards at that point), and also note that "MOST" indicator panels top most point IS USUALLY THE TOP OF THE MOVEMENT OF THE INDICATOR. A turndown of the macd line AT THE TOP OF THE INDICATOR PANEL, is a pretty firm indication that one should sell a long or open a short! please also remember that one can draw TREND LINES on the indicators themselves, which often are more reliable than trend lines of prices !

another trick i was taught, but is really for swing or position traders, is NOT to go long unless the macd AND the slow stochastics BOTH CROSS their respective signal lines ! this results in a slower buy signal as you must wait for BOTH indicators, but it sure carries full weight confirmation of an extended up move at that point !

as a last thought, since the MACD was invented back in the stone ages, many new indicators have come out to replace it, but the MACD is used by just about everyone, so if you think a stock is going up there are probably a few million others thinking the same thing at the same moment.
Guess what -- the market will probably go up, if only on that idea alone !

just some thoughts

mp

sorry MP, I was trying to merge a post and accidently deleted your original. eso