My 1st Million At 33 – yes, you can do it too

Few technical indicators give a clear picture on the movement of stocks. Unfortunately, all indicators are often too late by the time when the markets have made their initial move. The more averaging the indicator does, the later it will give you a signal, but the signal becomes more reliable. The vice versa is also true. The less averaging you do, the earlier the buy/sell signal comes, but it becomes less reliable. MACD is one of the signals that does a pretty good trade-off between reliability and opportunities (although I must say that it is often too late to do anything about it).

Here are the daily, weekly, and monthly MACD on SPY which clearly illustrate the current trends, and my personal take on markets going forward:

On the daily MACD chart: The fast EMA has just crossed the slow EMA. I project a short-term rally that will not break the recent high at ˙˙5.14 at around mid-March to mid-April timeframe.

On the weekly MACD chart: This is the most dreadful chart. The fast EMA has crossed the slow EMA for a little while. On a weekly basis, it almost mean that SPY will NOT make any headway. In fact, most likely SPY will have to give back a sizable portion of the gain since the rally started in March 2009. I project that in between late April to late July, it is best to stand on the sideline, or even go short.

On the monthly MACD chart: the fast EMA has crossed the slow EMA by some margin. I believe that it is basically saying that for people who project a Dow going to $4000 in a great depression scenario are very likely to be dead wrong. Quite likely, the March low was the absolute low for this bear market. However, in no ways, it gives a total green light on buying the stocks. I think long term wise, markets will continue to trade in a big sideway. The sideway range will be rather big, making most perma-bulls and most perma-bears to continue in their steadfast belief.