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Stock Price MACD Ranker Help

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					Stock Price MACD Ranker Help




 Stock Price MACD Help


    Stock Price MACD Ranker allows the user to create stock lists based on when a signal line crosses
    the MACD-1 indicator. The difference between a short term and a long term exponential moving
    average of the stock close price is called the MACD-1 indicator. A stock close price moving average
    is an indicator that shows the average value of the stock's close price over a period of time. The
    signal line is the moving average of the MACD-1 indicator. In other words, the signal line is the
    moving average of the difference between two moving averages.

    q Exponential Moving Average (EMA) -
    The Exponential Moving Average is calculated by adding a percentage of today's close price with a
    percentage of yesterday's Exponential Moving Average:

        Today's EMA = exp*Today's Close Price + (1-exp)*Yesterday's EMA
    If n is again the number of days to be used for the Exponential Moving Average, exp can be
    computed as:

        exp = 2.0/(n+1)
    The web site starts the EMA by going back in time 2*n days and initializing the EMA value to the
    2*n day's close price. It then runs the above iteration back to today. The EMA is considered to be
    correct when past day n is reached. Later stock prices in an EMA carry more weight than earlier
    stock prices,

      Today's stock price weight = 2.0/(n+1)
    The Exponential moving average is widely used by financial analysts to trade stocks. There are
    two types of trading signals the MACD Ranker can generate:

         q   MACD Bullish Crossover above signal line - The exponential short-long moving average
             difference has just crossed above the "average" of the short-long moving average
             difference. The stock is bullish.

         q   MACD Bearish Crossover below signal line - The exponential short-long moving
             average difference has just crossed below the "average" of the short-long moving average
             difference. The stock is bearish.


    The critical element in the moving average is the short and long days time period chosen. Each
    stock usually has short and long moving average days which will provide profitable trading signals
    using the above two indicators. The problem is choosing the days time period that will be
    consistently profitable. The length of the moving average should fit the market cycle you wish to
    follow. If you observe a stock having a 40 day up and down price cycle, the ideal moving average
    length would be 21 days. The formula for calculating the length is:

      Ideal Moving Average Length = (Cycle Length+1)/2.0
    Past studies have yielded these popular moving averages:

         q   Crossover of the difference between the short 12 day exponential moving average and the
             long 26 day exponential moving average with the signal line. The days used for the signal
             line average is typically 9.

         q   An "MACD" indicator used by the Stockpoint web site uses 30 days for the long moving
             average and 10 days for the short moving average.



    The input parameters for the MACD are shown next:


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    Below Step 1 is the desired ranking. The choices are:

         q   MACD Bullish Crossover above signal line -
               r The Short-Long average difference (MACD-1) just crosses above the signal line.
               r The Short-Long difference is itself averaged to create the "signal line"
               r The signal line average uses the signal line days selected.
               r The MACD bullish crossover stocks are then ranked by the highest MACD-1 difference
                 expressed as % of the Stock Close.

         q   MACD Bearish Crossover below signal line -
               r The Short-Long average difference just crosses below the signal line.
               r The Short-Long difference is itself averaged to create the "signal line"
               r The signal line average uses the signal line days selected.
               r The MACD bearish crossover stocks are then ranked by the highest MACD-1
                 difference expressed as % of the Stock Close.



    The web site defaults to MACD Bullish Crossover above signal line.

    The next selection is the number of ranked stocks displayed in the web page stock ranking table.
    There are five selectable options of 10, 20, 50 and 100 stocks. After you create a stock ranking
    table, you are allowed to save the ranked stocks in your online stock lists. The number of stocks
    displayed is the most number of stocks that can be saved in a list. The default value is 50.

    The next selections are the integer days in the long and short moving averages and the days used
    to form the MACD signal line average. The long days must be greater than the short days, and
    both must be greater than 0. The long days can be increased until the web site exhausts the
    online database. The web site has past stock data to 01/03/2000. The default values are 26 long

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    days and 12 short days. The signal line days must be less than the long days and defaults to 9.

    The July 2002 Futures magazine article "Building a better MACD indicator" by Meissner et. al.
    shows better quality trade signals occur if a trader waits 3 days after a MACD crossing and if no
    other MACD crossings occur. Setting "Number of days in the past where MACD crossing occurs:"
    to 3 searches for these types of MACD crossovers. Setting "Number of days in the past where
    MACD crossing occurs:" to 0 finds the standard MACD crossover trading indications. The authors
    of the article use the term MACD-R1 to identify MACD trading where the trader waits more than 1
    day to make the trade. The days wait parameter defaults to 3.

    The next selection is the input stock list. The user can select one of the online stock lists or create
    a list of stocks using three selections. If the input stock list is chosen, the stocks in the list are
    ranked without regard to volume or price.

    If the second option is chosen, all online stocks are filtered using the selections shown. Then they
    are ranked. The first of the three selections is a the minimum stock volume. The default is
    300,000.

    Your second and third selections are "Minimum Stock Price" and "Maximum Stock Price". Only
    stocks with current stock close prices within this range of prices are ranked. The stock prices in
    the past are NOT required to meet the price range. The web page uses the minimum and
    maximum stock price values set in General Settings for "Access Stock List Ranker" as the initial
    default values.

    Once you have made your selections, click the RANKING button next to Step 3. To the right of the
    RANKING button is a clock timer. The timer starts when you click the button. The server ranking
    time is limited to 45 seconds. Network time to transfer the data back to your web page can take
    awhile, depending on your connection, so the timer can exceed 45 secs.

    Two different web page results can occur depending on how much time your search takes, how
    many stocks are being searched and the number of users online. If all the stocks are ranked
    successfully, a web page similar to the one below appears:




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    Next to Step 3 the web page shows how many stocks were found satisfying your ranking and how
    many appear in the stock ranking table. Next to "Save" you can input in the text box the number
    of ranked stocks you wish to keep. The maximum number is the number of stocks shown in the
    stock ranking table. To the right of "Save" you can select any of the 9 online stock lists as the list
    that will accept the ranked stock list. Above the stock list selection you can backspace out and
    type in a new name for the stock list with which you are working. The list and the name are saved
    online when you click the Save button to the right of the stock lists. The stocks previously saved in
    the list selected are deleted when the new ranked stock list is saved.

    If all the stocks filtered were not ranked successfully because the search ran out of the allocated
    time, a web page similar to the one below appears:




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    Next to Step 3 the web page shows how many stocks were found satisfying your ranking and how
    many stocks have been ranked thus far. The web page ranking has a time limit of ~45 secs. If you
    reach this time limit, the ranking results thus far are returned to the web page. You have the
    option of continuing the ranking, which resumes where it left off, by clicking the CONTINUE button
    in Step 3. You can repeat this until all the stocks are searched and the extra CONTINUE button no
    longer appears on the web page. The table will reflect the ranking from all stocks searched. If you
    decide to repeat the ranking until all stocks are ranked, do not change any of the search filter
    settings until the ranking is complete.

    The reason for the time limit is to prevent the browser from timing out and to distribute the server
    load between the users. A browser time out can occur if the ranking takes too long to complete.

    In both of the cases discussed above a new search can be started at any time by clicking the
    RANKING button in the last Step shown.

    The above ranked stock table is for an MA Bullish CrossOver Ranking. The columns are:



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         q   RK - Rank. This is the initial ranking of the stock symbols.

         q   Stock - The stock symbol. Clicking the stock symbol takes you to the Platinum Chart web
             page. Clicking the link "chart:MA", next to the stock symbol opens a new window with the
             Optionetics StockPoint chart of the two moving averages used in the ranking. Another link:
             Chart:SC, creates StockChart Charts in a new window and shows the MACD lines, values
             and crossing signal. StockChart's charts, during market hours and until the site updates, is
             one day ahead of the end-of-day data used in the rankings.

         q   Stock Close - The latest stock closing price.

         q   Long EMA - The long moving average value for the chosen date.

         q   Short EMA - The short moving average value for the chosen date.

         q   Short-Long Difference - The difference between the short and long moving averages.

         q   Difference as % of Stock Close - The absolute value of the difference between the short
             and long moving averages is expressed as a percent of the stock price.

         q   MACD Signal Line Value - The latest average of the difference between the short and long
             moving averages.

         q   Volume - The latest stock (not option) trading volume.

         q   Long EMA Change - The difference between today's and the prior trading day's long
             moving average expressed as a percent.


    The stocks are ranked using the "Difference as % of Stock Close" column. The July 2002 Futures
    magazine article "Building a better MACD indicator" by Meissner et. al. shows the best quality
    trades occur when the moving average difference expressed as a percentage of the stock price is
    greater than 1.5%.




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