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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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