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To: ig who wrote (438)	10/8/2000 6:14:01 PM
From: Teresa Lo	Read Replies (1) \| Respond to of 8925

MACD: A Chimera? "...grouped MACD with popular oscillators such RSI and Stochastics." There's a lot of debate here on this, and I think I have stepped into this manhole before. LeBeau and Lucas discuss the MACD in their book, and stated that it is a combination of three exponentially smooth moving averages that are expressed as two lines, that can be displayed as a histogram or as an oscillator, with overbought and oversold areas. That said, they continue on to say that it's best used as a trend-following study, with an emphasis on it being most effective in "orderly long-term markets". Colby and Meyers classified it as an oscillator. If we take a look at Appel's book, where he talks about moving average systems in general, he classifies them as oscillators - although he does not state this with MACD, even though it is based on the point spread difference between two exponential moving averages of the closing price. On top of everything else, people use it to look for divergences, and also draw trendlines on the indicator itself. Seems that the MACD can be employed as a trend following tool, as an oscillator due to the fact that it does have a zero line plus overbought and oversold levels. The bottom line is the same each time. When traders use indicators, they need to know their mathematical construction intimately and therefore, know how it will wiggle, and then devise their own way of applying it to whatever they are trading. It's just so complicated, IMHO, compared to analyzing price and volume. But then again, I ain't the sharpest tool in the shed ;0) Teresa equis.com