Stock Diamond - Technical Analysis Education

Overview

The MACD provides several useful conditions for screening when combined with some extra conditions. Since MACD is a trending indicator the extra conditions will focus on ensuring trending stocks.

The main point of this newsletter is to highlight the ability to screen for more than one signal of the same indicator. This creates a series of events which will (potentially) give the trader a more desirable results list. Along with some base price and volume conditions a neat and tidy list can be generated.

In this months newsletter we will show a nifty screen using MACD, price and volume ratios as well as offering some extra conditions that a trader might want to add.

Sample screen:

Screen:

1) Exchange: NYSE
2) Tech 1: MACD signal line cross within 2-5 days
3) Tech 2: MACD zero line cross within 0-2 days
4) Growth fundamental 1: 20 day price ratio greater or equal to 1
5) Growth fundamental 2: 20 day volume ratio greater or equal to 1

Results:

Sample Chart:

Here is one of the results from the screen. In this graphic we have highlighted the conditions that was screened for.

Summary

The time frames used for the MACD signal line cross and zero line cross will have a significant impact on the types of stocks you see. If we look at our chart graphic, the signal line cross around 7/9/06 followed by the line cross on 7/20/06 is a larger spread. Depending on what type of MACD chart you would like to see altering these dates will get you what you need.