Ask Colin

MACD

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  1. People use different colours for the MACD line and the Signal line in the Moving Average Convergence Divergence (MACD) indicator. How can I tell which line is which?
  2. Part of one of your Ask Colin answers was the other useful indicator is the monthly MACD. Where it stays in buy mode ... What do you consider in your opinion is the buy mode?
  3. How does MACD indicator give a buy or sell signal?
  4. Which of the MACD lines will respond first to changes in price?
  5. I use MetaStock, I like the MACD, but sometimes the daily chart is the opposite of what a weekly chart indicates. As I am a 2 - 3 month hold on a stock, should I concentrate on daily charts or weekly charts?
  6. To buy troughs in a trend, is MACD a useful indicator for an investor?
  7. What does it mean if several stocks in strong downtrends are showing three or more divergences on MACD?
  8. What parameters do you use for your monthly MACD?
  9. In calculating MACD, which days can you start making the calculation of each line?
  10. In your June 2002 Shares article on MACD, you said it was a powerful exit indicator. Can't it also be used for entries or at least to monitor developing opportunities?
  11. Where can I find a book on momentum oscillators and the MACD histogram in particular?
  12. What book would you recommend on Moving Average Convergence Divergence (MACD)?
  13. You use 26,12,9 for MACD, but Sharefinder uses 34,13,8. Which is better?
  14. The charts I use show a Weekly Histogram updated on a Friday only, using Weekly (26,12,9). I was wondering if there is a way to have a Weekly MACD Histogram update daily (Monday to Friday)? Would I do this by multiplying the above time periods by five (5)? That would mean a MACD (130,60,45). Would this be correct or completely invalid?
  15. With MACD, what is the zero line and how is it calculated? I understand that, as a general rule, buy signals given below the zero line are supposed to be much stronger than those given above - the latter signals being in stocks that could be considered to be overbought. I also wondered whether you had formed any views yourself, in relation to the Australian stockmarket, on whether focusing much on the location of the zero line is worthwhile. I notice that a number of stocks that have been performing well in recent months (such as ABC, DOW and ION) are above the weekly MACD zero line. I also notice that, if one never bought stocks that were above the zero line, one would have missed out on a nice upwards move in CSL. (On the other hand, I see that, by waiting patiently, one can find a similarly well-regarded long-term performer, CBA, falling down below the weekly zero line.)
  16. Why does the MACD indicator of DVT created on Metastock 7.02 look so different to what you showed in a November 2000 issue of Shares magazine?
  17. You quote in Shares Weekly 13-20 October 2000, "The third and most worrying sign is that the MACD Histogram has made lower peaks in July, August/September and now again in October, where it barely clawed its way to positive territory". My MACD for MXO using Metastock (setting 9 signal periods)...looks nothing like the MACD in your MXXO chart..in fact my chart shows MACD negative peak in April. ..with peaks becoming positive & increasing height from July to Sept...with a lower peak in Oct (at most recent prices. i.e. my chart shows no divergence at all in MXO MACD...any suggestions why this may be so...do I have time periods set differently to yourself?
  18. We read your article with great interest and were interested to know how you created the chart with MACDH part on it. We have the Metashare/Metastock system, but I can't seem to create the same overlay that you have. Is it in the system parameters, or is it not available in that form you have used with this system?
  19. What is the MACD indicator?