Hi Orcroft, I was talking generically, not trends. I agree with you that MACD, and other measures, can predict a likely, probabilistic or statistical trend. We know that the probability of a coin toss is 50% heads and 50% tails in the long run but that doesn't mean that there can't be 10 or even 100 heads in a row. Would an analysis like MACD tell us when the streak will start or end?
From what I see in recent events is that MACD trends are not always showing in advance what most likely will happen when events occur that are either not predicted or are like lighting strikes. It seemed to me that the market moving the way it did after the election in November was not predicted or would have shown up with MACD prior to the election. Then there are events like Black Monday, October 19, 1987, when stock markets around the world crashed, shedding a huge value in a very short time.
Unless I misunderstand MACD, from what I've looked at its distant future vision is somewhat limited. We can look at the history of bull markets and bear markets and see that they happen from time to time but MACD can't tell us when the exact inflection point will be, but we know, historically, they will happen.
MACD, after all is a moving "average" of prior data and as such short, sharp events, like the latest Congressional failure around health care, don't typically show up in the charts for a few days and are not predicted in advance. However, there is a degree of mushiness and time spread to most events such that there is time for MACD, and such like, to begin to show a possible direction.
Best,
Allen
