The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone, Kirk here again and welcome back to the daily call. Today, we are going to be answering the question, “Does the moving average convergence divergence or commonly referred to as MACD indicator actually work?” Now, I can tell you, we have done extensive testing on this indicator and for the most part, it is not a useful indicator. That's the golden nugget that you get out of today. You can obviously check out our research on technical analysis by heading over to optionalpha.com/signals. But the whole premise behind moving average or MACD indicator actually makes a lot of sense and what it really is trying to do is trying to look at the generalities between or the predictability of shorter term moving indicators as opposed to longer term. Say a 9-day moving indicator versus a 12 or a 26. And so, if the shorter term moving indicator is moving up and starts to cross over a longer term, that might be bullish or if the reverse happens, the shorter term indicator or moving average is moving down, maybe