The MACD
When the indicator line bottoms, comes back and passes UP through the indicator line, that is referred to as a MACD Crossover. Thie event is WIDELY used to "anticipate" momentum swings.
I initiated a discussion a couple months ago on the G&K thread related to the utility of the MACD. My initial look at this metric, together with the commentary I received from investors on that thread, was that the MACD does not predict an upward move. Instead, the MACD crosses over AFTER the upward move has been initiated.
Looking at Unclewest's reference........
tscn.com
one can see that the MACD crossed over 4 x over the price of $72/share, just prior to the price collapse of this past month. Purchasing there, despite the encouragement of a MACD crossover, would have left the shortterm player in deep do-do this month.
OTOH, if one happens to be LTB&H, the MACD is not that helpful.
Bottom line, I'm not convinced it is predictive or helpful. I am convinced that the MACD won't crossover until the share price has already gone up. Which means a short-term purchase at that point is a bet that the share price will continue to go up. Again, looking at the graph from above, that doesn't consistently happen.
Other opinions???
Stan |
