WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 219.44

+16.8%

Jan 6 3:59 PM EST

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To: Esa who wrote (1578)	11/16/1997 3:16:00 PM
From: Loren	of 60323

Well, I looked at the information in this site. One of the first things I noticed is that the MACD (Moving Average Convergence Divergence) explanation said that moving averages were ratio'd (one divided by another). Every key resource I have ever seen on the subject of MACD (from Technical Analysis journals to textbooks to several software packages) have subtracted moving averages, not divided them. I'm not saying these guys don't know a lot about TA, but for them to be so blatantly different than the classical MACD without at least warning people about the fact that their constructions are different? Be careful... By the way, the classical MACD indicators are constructed as follows: 1. FastMA = xaverage(close,12) [12-bar exponential mov.avg. of closing price] 2. SlowMA = xaverage(close,26) 3. MacdDiff = FastMA - SlowMA 4. MacdMA = xaverage(MacdDiff,9) [9-bar mov. avg. of the MacdDiff line] 5. MacdHist = MacdDiff - MacdMA Plot 1 and 2 together on same scale with closing price. Plot 3 and 4 together. Plot 5 either separately or with 3 and 4. Normally, plot 1-4 as lines, plot 5 as a histogram (bar graph). Most traders buy when MacdDiff crosses upwards over MacdMA (this is equivalent to MacdHist crossing upwards over zero). They sell when MacdDiff crosses downwards under MacdMA (this is equivalent to MacdHist crossing downwards under zero). Loren

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