Q: What is MACD, and how can it be used to time purchases and sales of stocks and the averages?
A: MACD stands for Moving Average Convergence Divergence, and it was originated by Gerald Appel. It is an indicator included in most charting programs. If you use www.bigcharts.com and select either the java charts or interactive chart option, you can bring up a MACD chart on anything in their data base.
There are many ways to use this tool; but essentially, you buy after the two lines are in negative territory and then the lower line moves over the higher line.
Sells are the opposite. You would get a MACD sell signal once both lines are positive; i.e., above the zero line and then the higher line crosses under the lower line.
