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Any ideas why MACD has gone crazy lately?

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pennywise75

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Hey

Still learning the ropes, Just wondering if anyone has any ideas why volume and macd has gone loco since july07... really started change around feb 07

This chart is xao but most stock seem to be doing the same

please let me know if my image is ok .. is there a better way of adding images?
 

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  • xao_ax.bmp
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Having dramas using bigcharts to draw XAO
can someone help

I just want to show XAO over 10 years with a simple MACD and VOL
 
Don't need to use bigcharts, just use the same procedures using the charting software you use instead of bigcharts.

IE - Take a screen shot, save into paint and then save as a jpg or png file to your computer and then you should be able to post it up.

If you read further through that thread you should be able to find more info.
 
My thoughts...

The MACD is just the difference between 12 day and 26 day EMAs. Because the price of shares is more than it was ten years ago, the difference between 12 day and 26 day EMAs will also increase (in absolute value, the percentage movements should still be roughly the same), so the MACD should get bigger as the price of shares increases. Also notice it is starting to get smaller as the prices are coming down again.

Thats not to say there isn't another factor involved, but no cause for alarm. Its pretty much what I'd expect to see
 

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  • xao_ax_price_daily_and_macd___daily___26_periods___12_periods___9_signalperiods.12aug83_to_27jun.png
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That is very true about MACD slackjaw.

But if you look at a percentage MACD (which you can create in amibroker or metaslop or similar), it still shows some extra movement. That we've had higher than normal volatility is what this shows up.

It is also confirmed by statistical volatility. The image below shows 6 month volatility since after 1987 and shows that recently we've had the highest level since 1987.

So the answer to the OP is that volatility has been greater than normal.
 

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In times of high volatility we get swings of volume often outside of the norm both in excess and in contraction.
This causes wide ranges and swift contractions.
Hence your wild swings.
 
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