Understanding the MACD Indicator

[Gunnski]

Also try this. It is one page with a simple diagram. I think it will help.

Incredible Charts: MACD (Moving Average Convergence Divergence)

No. I am not trying to sell anything. This is just a nice page to help educate!

[Xyvern]

Gunnski,
Thanks for the help but I'm still a bit confused so looking at the chart I provided. What's the red line crosses the black line under MACD ?

$INDU - SharpCharts 2 from StockCharts.com

[Gunnski]

On your chart where is says MACD in the bottom window.

-MACD (12, 26,9) are your settings for MACD. -72.925 is the darker line, which is the 12 day setting (fast line). The -0.337 in red is your 26 day line (slow line). The -72.588 in blue is the Histogram often referred to as mountains or peaks. The peaks run along your 0line in the graph. When they are peaking up they are above your 0 line. Positive.

As is your chart the are peaking down below the zero line, consistent with the MACD lines. You can see the negative cross over when the Thick dark line pierced the slower red line and the darker line continued down. One tool telling you maybe time to SELL.

I sugesst setting your MACD to 8, 17,9.

[Xyvern]

Originally Posted by Gunnski

On your chart where is says MACD in the bottom window.

-MACD (12, 26,9) are your settings for MACD. -72.925 is the darker line, which is the 12 day setting (fast line). The -0.337 in red is your 26 day line (slow line). The -72.588 in blue is the Histogram often referred to as mountains or peaks. The peaks run along your 0line in the graph. When they are peaking up they are above your 0 line. Positive.

As is your chart the are peaking down below the zero line, consistent with the MACD lines. You can see the negative cross over when the Thick dark line pierced the slower red line and the darker line continued down. One tool telling you maybe time to SELL.

I sugesst setting your MACD to 8, 17,9.

Thanks you so much, now I understand how to read MACD chart. One more thing, for Stochastics chart do I use the slow one as Phil suggested in his book and set it to 14,5 ?

[Gunnski]

Your tough. I love the attitude!

Others in the Community will tell you differnt stocks or sectors need differnet set ups. I am not that smart on such things. I like to keep it simple.

I use 8,17,9 for MACD. 14, 5 for Stochastics. 30 MA for Buying. I will look at 10 MA as a trigger to sell along with the other (2) tools. I will also run Stochastics at 21,14.

My favorite is a EMA50 with a 13EMA upward crossover. As you learn different tools they are there to assist in decision making. If you have proper MOS you know you have found value! Most important always focus on the three tools from the R-1 Book. If not sure or you cannot find an answer to a questions regarding the M's etc. Toss it and move on. Or watch the activity for a couple of days. Keep a close eye on the charts and R-1 Tools.

[Xyvern]

Originally Posted by Gunnski

Your tough. I love the attitude!

Others in the Community will tell you differnt stocks or sectors need differnet set ups. I am not that smart on such things. I like to keep it simple.

I use 8,17,9 for MACD. 14, 5 for Stochastics. 30 MA for Buying. I will look at 10 MA as a trigger to sell along with the other (2) tools. I will also run Stochastics at 21,14.

My favorite is a EMA50 with a 13EMA upward crossover. As you learn different tools they are there to assist in decision making. If you have proper MOS you know you have found value! Most important always focus on the three tools from the R-1 Book. If not sure or you cannot find an answer to a questions regarding the M's etc. Toss it and move on. Or watch the activity for a couple of days. Keep a close eye on the charts and R-1 Tools.

Thank you.

[Xyvern]

Gunnski,
OMG ! you are right about EMA-13 and EMA-50 cross over. It's so much clear now and you can see the buy point and it's relationship with MACD and Stochastic.

[Gunnski]

Just another tool. I do not want to stray from the R-1 tools as outlined. But, I have back tested this on StockFetcher & it works! They work great together.

In the Round C competition, I used EMA50 and EMA 13 crossovers. The top ranked stock on my scan. I ended up the round with a 21.00%+ ROI. Not bad considering what happened the last week of the contest.

[dcarlson53]

Being new perhaps someone can give me a little direction so I can see if I'm following this new found information in the right way. I have four companies I have been watching one of them being Walgreen's which is selling for 44.00 and the MOS I come up with is 22.00 What I was wondering is according to the three tools Phil mentions in his book, if the price was right it still would not be time to buy, if I'm reading them right. The second company is FLIR Flir Systems they make infrared cameras MOS of 20.00 selling for 42.00 right now but if the price was low enough it would be a good time to buy according to the tools thanks for the help

[bovverd]

Originally Posted by dcarlson53

Being new perhaps someone can give me a little direction so I can see if I'm following this new found information in the right way. I have four companies I have been watching one of them being Walgreen's which is selling for 44.00 and the MOS I come up with is 22.00 What I was wondering is according to the three tools Phil mentions in his book, if the price was right it still would not be time to buy, if I'm reading them right. The second company is FLIR Flir Systems they make infrared cameras MOS of 20.00 selling for 42.00 right now but if the price was low enough it would be a good time to buy according to the tools thanks for the help

I believe - Despite the price being on the MOS the tools may be indicating the stock is expected to continue heading south so in order not to lose money by buying in on the way down you should wait for the next set of greens to buy in on the way up and ride it on the upward direction.