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Born-Again Bulls

These are stocks that have experienced a bullish MACD Crossover (either a Zeroline or Moving Average Crossover) during the week. Many traders consider these crossovers to be bullish buy signals.

However, since MACD is a lagging indicator, it is usually a good idea to confirm its buy signal with another indicator. Therefore, we apply an extra filter on the Directional Movement, only presenting stocks whose +DI line is above the -DI line, indicating a positive momentum.

But it's not wise to buy MACD Crossover stocks with wild abandon. Stocks that have been deep below the Zeroline in bearish territory for a long time usually take a long time to recover. When they finally burst above the Zeroline the first time, they have the tendency to fail and fall back below. Ones that are successful still pull back a bit or consolidate a few weeks before they make another attempt at advancement.

It seems that the stocks with the healthiest price consolidations have nice shallow cup-shaped MACD lines that either briefly dip below the Zeroline or have a Moving Average Crossover above the line.

This is why we sort the Zeroline Crossover stocks in ascending order of how many weeks they spent below the Zeroline in bearish territory. This way, the stocks that spent the least amount of time below the line are at the top and are probably the best candidates for purchase.

Alternately, the Moving Average Crossover stocks are sorted in descending order of how many weeks the MACD line was below the Signal line. Theoretically, the more weeks that the MACD line was below the Signal line while still staying above the Zeroline indicates a good healthy bullish consolidation. So those that are consolidating the most are at the top of the table.

Instead of waiting for these crossovers to happen, you can get a jump on things by checking out the Potential Bulls screens. They will provide you with a list of stocks that will most likely achieve an MACD Crossover of some kind BEFORE it happens.

For an illustration of a stock with bullish MACD behavior please take a look at the Potential Bulls section.

See Born-Again Bulls tables from several weeks ago.
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