I have been a technical analysis fan for years. There are times when the emotions of fear and greed overtake rational thinking on the markets presenting overbought or oversold situations. These are situations you can take advantage of and profit from. So what technical tool is the best? I honestly don’t think there is one particular silver bullet, but for my money, the MACD is the most effective.
If you don’t know the first thing about the MACD, it stands for Moving Average Convergence Divergence. It was created by Gerald Appel in the late 1970s. It uses exponential moving averages over different time frames to show changes in the strength, direction and momentum of a company’s stock. I strongly suggest you do some research on this tool. After you have become more familiar with it, look at as many charts as you can. Take a look at the MACD and how it compares to the direction of the stock price. The correlation is uncanny. For the nay sayers, they could argue that the correlation is purely coincidental. For one-off situations their counter argument could be valid, but these are not one-off situations. There are just too many examples where the MACD has been right. This is beyond coincidence, and it tells a story of opportunity.
At twopercentgoal.com, the MACD is used in concert with other signals for entry and exit points for stock purchases. We start with a macro perspective. Simply look at the S&P Large Cap Index and its MACD. When the slope of the MACD is upward, the index is bullish and when the MACD slope is downward, the index is bearish. There is an undeniable 1:1 correlation between the two. This tells you when you should be going long or going short. From there, use the MACD for entry and exit points for a company’s stock. You will see when it goes from negative to positive territory and then when it confirms above its zero line. This is a very brief overview but, in a nutshell, it shows short term investing opportunities for long term investment gains. Look at twopercentgoal.com for more info.
Cheers,
Al
Source: https://twopercentgoal.com/the-macd-simply-the-most-effective-technical-tool/
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Al O'Grady
Financial Writer
Al brings a wealth of expertise in smart investing and financial strategies, and we are confident that his insights will be invaluable to our community. With his deep understanding of the stock market, wealth management, and investment strategies, Al will provide our readers with valuable information and trading tips to help them navigate the financial landscape. Stay tuned for his upcoming articles and join us in welcoming Al to the team!
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