Hi SFSecurity
"But, of course, one can not predict the direction the market is going even a week into the future".
From a probabilistic or statistical point of view I disagree with the above statement.
Your statement implies that the probability of one predicting the direction of the market has a zero probability percent.
When the sky is dark and it starts to thunder the probability of rain is very high.
So, if I were to place a bet that it will rain, I think it would be based on a probability figure in my favor.
I am convinced that the MACD is that barometer that can predict or indicate the possible direction of the market with a high probability of success.
Using a monthly 24,52,9 setting and when the MACD lines converge either upward or downward the probability old f that trend to continue is very high.
Some action would be taken at that point. Either exit or enter the market until further notice.
I back tested the DJIA, NYA and the NXD from 1995 to date.
From 1995 to 2000 the DJIA had a long ride. Around 4/1/2000, the MACD barometer indicated the probability of a downtrend. The downtrend materialized until around 8/1/2003 where an uptrend move was indicated which also materialized until 2/1/2008.
So, 2/1 2008 out. Back in 11/1/2009.Back out 7/1/2015. Back in 11/1/2016. The in and out moves were all predictive.
The NYA and NDX had similar results.
Regards
ocroft
