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Strategies & Market Trends : NetCurrents NTCS

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To: ig who wrote (469)	10/10/2000 10:18:10 AM
From: Michael Watkins	Read Replies (2) of 8925

I guess the problem I have with MACD divergences, really, indicators in general, is that they still abstract what price and volume are showing. The MACD in the COMPX example you posted makes sense - price moved sideways for a while before the retest, so of course the "divergence" is going to be there since the moving averages during the sideways consolidation are indeed coming together. Since divergences can also fail, and we can see price bars with our own eyes, it doesn't seem any more reliable or instructive (to me) than watching price and volume. I'm not saying at all that a MACD divergence on a test of a recent top/bottom can not be made to be a profitable trading rule. Indeed it could with proper money management and focus on where the exit door should be... Disclaimer, I am a reformed system trader, used to have a whole heap o' indicators on all my charts. Now I have just ADX and a few moving averages. Just my two cents for the discussion.

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