One of the set ups that has been pretty successful for us lately has been a certain type of MACD Crossover with a specific set of confirming criteria.
To start with we are going to want to make sure the stocks have decent volume. The next thing we will look for is the crossover. Most screeners will identify a MACD crossover and will let you specify above or below 0 on the MACD but they may not tell you if it was a bullish crossover or a bearish crossover.
Worst case you have to click through a few results to match up the rest of the criteria. That still beats looking through thousands of choices.
Here is an example of what we are looking for.
This stock caught our attention a couple days ago. It had a bullish MACD crossover below 0 (the bottom arrow) which showed it was potentially reversing. Since it was below 0 on the MACD it told us it was into oversold territory and had room to go up.
The next element we looked at was support and resistance in the moving averages. That gives us an indication if the MACD crossover is a blip or a true reversal. We can see by the top arrow that after the crossover, we saw a couple days that confirmed support at the 10 day moving average.
At that point we know that the odds of this continuing to go up are in our favor. There is no guarantee, but since this pattern has been reliable for us in the current market, it instills confidence. Tomorrow, we’ll take a look at picking a strike price to see what the call options are going for and consider entering a trade, or you can click here to read the article now.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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