MACD Oscillator

The Moving Average Convergence-Divergence (MACD) captures trend and momentum. It is used to spot changes in strength, direction, momentum, and duration of a trend. The MACD fluctuates above and below the zero line also called the center line. It is unbounded and has no upper and lower limits.

The MACD Oscillator consists of:

  • MACD Line (Blue Line)
  • Signal Line (Red Line)
  • Center Line
  • The difference between the MACD Line and Signal Line.
  •  

Ways to Interpret the MACD Oscillator

Interpretation of the MACD Oscillator
Buy When the MACD Line (Blue Line) crosses the Signal Line (Red Line) upwards.
Buy When the MACD Line (Blue Line) or the Signal Line (Red Line) crosses the Center Line upwards.
Buy When the MACD line (Blue Line) falls steeply below the Signal Line (Red Line).
Sell When the MACD Line (Blue Line) crosses the Signal Line (Red Line) downwards.
Sell When the MACD Line (Blue Line) or the Signal Line (Red Line) crosses the Center Line upwards.
Sell When the MACD line (Blue Line) rises suddenly above the Signal Line (Red Line).

 

Look for the Following Divergences

Divergences
Identify a Bottom Forming When the price of the stock goes lower but the MACD Oscillator goes higher.
Identify a Top Forming When the price of the stock goes higher but the MACD Oscillator goes lower.

 

Example 1

MACD Oscillator 1
Source: Thinkorswim by TDAmeritrade

 

Example 2

MACD Oscillator 2
Source: Thinkorswim by TDAmeritrade

 

Example 3

MACD Oscillator 3
Source: Thinkorswim by TDAmeritrade

 

Example 4

MACD Oscillator 4
Source: Thinkorswim by TDAmeritrade

 

My Financial Analysis of Stocks

  • Another Dead Cat Bounce, We Haven't Bottomed Yet, Goldman Predicts S&P 2000 The Dow Jones has rallied to 22,327 over the past several days. However, we believe this is another dead cat bounce. We sold all our shares of United Health ...
    Posted Mar 30, 2020, 8:35 PM by Intelligent Investor
  • Coronavirus Is The Black Swan Event That Ended The Bull Market In 2020 A Black Swan Event is an unpredictable event that causes catastrophic damage to an economy. A few days ago, we wrote an article describing the coronavirus as a Black Swan ...
    Posted Mar 18, 2020, 9:21 AM by Intelligent Investor
  • Beyond Meat (BYND) and Dunkin (DNKN), The End Of A Tale Of 2 Speculative Stocks During a recession speculative stocks get pounded down to the ground. Thus, we sold all of our shares of Beyond Meat (BYND) and Dunkin' Donuts (DNKN). Beyond Meat is in ...
    Posted Mar 18, 2020, 9:22 AM by Intelligent Investor
  • The Dow Jones Rallies 1294 Points, Sold More Stocks On This Dead Cat Bounce The Dow Jones jumps 1294 points a few days ago, however, we believe that this rally is a "dead cat bounce". We have to wait for the next quarter's ...
    Posted Mar 16, 2020, 9:56 PM by Intelligent Investor
  • We Panic Sold Today was a really bad day in the market. The Dow Jones opened at negative 1000 points. It seems as if the coronavirus is gaining steam and is about to ...
    Posted Mar 18, 2020, 9:23 AM by Intelligent Investor
  • I'm Calling Tops, It's Over, The Bull Market Is Over, Here Comes The Bear Market, A Recession Is Coming We weren't sure yesterday that the bull market is over. In the morning today, the Dow Jones was up about 300 points, and I thought we were just having ...
    Posted Mar 1, 2020, 10:47 AM by Intelligent Investor
  • Went On A Selling Spree Today I think this stock market bull run is over. I just have a hunch that it's over. However, I've been wrong before. The deadly coronavirus outbreak seems to ...
    Posted Feb 24, 2020, 10:41 PM by Intelligent Investor
  • Sold Apple (AAPL) At What Looks Like A Peak Apple (AAPL) looks like it may have peaked at $325/share. News came out during the past couple of days that Apples largest factory in China that makes iPhones is ...
    Posted Mar 18, 2020, 9:26 AM by Intelligent Investor
  • Beyond Meat (BYND) and Dunkin (DNKN), A Tale Of 2 Speculative Stocks Last year, we bought Dunkin' Donuts (DNKN) and Beyond Meat (BYND). We couldn't find any bargains, so we invested a small amount in these 2 speculative stocks.I've ...
    Posted Mar 18, 2020, 9:27 AM by Intelligent Investor
  • Stocks That We Bought and Sold for the Past Year to Date Sold John Deere (DE), it is a cyclical business and the trade war the U.S. has with China isn't making things any better. Berkshire Hathaway also sold their ...
    Posted Jul 27, 2019, 12:04 PM by Intelligent Investor
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