Something I just realized.
The MACD aim crossover introduces an opportunity
that I think Clive wrote about in a past post.
IIRC It talks about how capital can be used
similar to a rising stock but visually hard to
recognize.
Look at this BA example.
BA entered an aim position at the MACD crossover
price of $41.81 on 6/1/2000.
At the MACD crossover downward signal price of $51.20 an aim sales advisory was initiated. $12,447 total. $11,126 on the stock side and $1,122 on the cash reserve or the cash ledger side.
Because my cash reserve will not be released to average down doing the downward MACD signal, the stock side has to be logically liquidated so as not to lose its value from the expected downward move.
Now, here is where the capital side becomes similar to the stock side because if the expected downtrend materializes, the capital side will receive the benefits.
On 6/2/2003, a MACD entry price at 34.42 was entered.
The stock price fell from 51.20 to $34.42 which is a 32.77% loss of which the capital side benefited.
So, this is similar to a stock going from $20.00 to $26.55.
It occurred again. Stock fell from $87.46 to $49.67 a 43.2%. Similar to stock going from $20.00 to $28.64.
Just an observation.
Regards
ocroft
