{"product_id":"v07-c02-individ-pdf","title":"V.7:2 (56-61): Individual stocks and MACD by Thomas Aspray","description":"Individual stocks and MACD\nby Thomas Aspray\u003cbr\u003e\u003cbr\u003eThe Moving Average Convergence-Divergence method specifically MACD-Histogram (MACD-H)\nand MACD-Momentum (MACD-Mo) can be used to identify turning points in the commodity\nmarkets (See Stocks \u0026amp; Commodities, August and September 1988). MACD also is useful and valid for\nthe cash indices as well as individual stocks. In this article, I will show you how these indicators work on\nindividual stocks.\u003cbr\u003e\u003cbr\u003eCalculating MACD is a straightforward matter (Figure 1). The real work is in choosing the moving\naverage period length. I calculate MACD-H using 10-, 20- and 10-periods (day or week). The MACD-H\nis the histogram version of the oscillator implemented in the CompuTrac system. My new MACD-Mo is\na 3-period smoothed (simple moving average) of a 10-period momentum of the MACD-H.\u003cbr\u003e\u003cbr\u003eMACD formula\u003cbr\u003e\u003cbr\u003eGerald Appel, who developed MACD, originally used periods (days) of 12 and 26 days to calculate\nMACD and a 9-day average to get a \"signal\" line. These periods may be translated into approximate\nexponential moving average (EMA) alpha's by a = 2\/(n + 1), where \"n\" is the number of days. Using\nthese values to be consistent with Appel's work,12 days = 0.15, 26 days = 0.074, and 9 days = 0.2. Thus,  ...\u003cbr\u003e\u003cbr\u003eFigure 2 - NYSE Composite\u003cbr\u003e\u003cbr\u003eIn this weekly chart, the first point to concentrate on is May 1987, where both MACD-H and the\nMACD-Mo were negative. The MACD-Mo flattened out in late May and started rising by late June. The\nMACD-H bottomed in the latter part of May and then began to rise. With both lines improving in\nmid-June, the retest of the lows provided a buying opportunity.\u003cbr\u003e\u003cbr\u003eThe MACD-H moved into the buy mode in the first week of July, point 1, and was confirmed one week\nlater when MACD-Mo crossed above the zero line, point 2.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133787533681,"sku":"\\V07\\C02\\INDIVID.PDF","price":5.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_5340ffff-dd52-477f-ab5b-e3f089dfb2bd.jpg?v=1739652493","url":"https:\/\/shop.traders.com\/products\/v07-c02-individ-pdf","provider":"Stocks \u0026 Commodities","version":"1.0","type":"link"}