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2018issue C028-11

Weekly and daily PPO scale versus MACD, with bounded RSI and stochastic readings

The weekly-and-daily momentum stack can keep MACD signal language while changing only the unit of the gap. Editorial interpretation: keep MACD when the hypothesis is absolute average separation, switch to the percentage price oscillator when those readings must stay comparable after large price changes or across securities, and leave overbought and oversold questions to the relative strength index and the stochastic oscillator.

  • Editorial interpretation: keep MACD when the hypothesis is absolute average separation, switch to the weekly-and-daily percentage price oscillator when that structure must stay comparable after large price changes or across symbols, and reserve the relative strength index and the stochastic oscillator for overbought and oversold readings.
  • The combined stack uses a weekly percentage line and a relative daily percentage line, with relative-daily crossovers, daily and weekly centerline crossovers, and divergences matching weekly-and-daily MACD signal language.
  • Percentage oscillator levels can be compared across securities and across long intervals even after price has doubled or tripled, which the absolute MACD form does not support in the same way.
  • The weekly-and-daily percentage price oscillator is not range-limited, so the relative strength index and the stochastic oscillator are better suited to overbought and oversold conditions.
Entries in this reading3 entries
Current trackMACD115 readingsStochastic oscillator170 readingsRelative Strength Index186 readings

Absolute gaps and percentage gaps

Weekly or daily MACD records the absolute gap between two exponential moving averages. The weekly-and-daily percentage price oscillator divides that gap by the slowest average, the 130-day exponential moving average, and multiplies the result by 100.

The weekly percentage price oscillator equals the 60-day exponential moving average minus the 130-day exponential moving average, divided by the 130-day exponential moving average, then multiplied by 100. The daily percentage price oscillator equals the 12-day exponential moving average minus the 26-day exponential moving average, divided by the 130-day exponential moving average, then multiplied by 100.

An exponential moving average is a recursively weighted average of closing prices. The 12-day, 26-day, 60-day, and 130-day lengths are the defaults used to build both the absolute and percentage forms.

Weekly and relative daily lines

The combined construction uses a weekly percentage line and a relative daily percentage line. The relative daily percentage price oscillator is the weekly percentage oscillator plus the daily percentage oscillator, used as the faster line in the combined stack.

The listed signal types are relative-daily line crossovers, daily and weekly centerline crossovers, and divergences, matching the signal language of the weekly-and-daily MACD form. A centerline crossover is a sign change through zero on the weekly or daily percentage line, read as a shift between net upside and net downside average separation.

The weekly percentage line is positive when the 60-day exponential moving average is above the 130-day exponential moving average and becomes more positive as that gap widens. It is negative when the 60-day average is below the 130-day average, with more negative readings as that downside gap widens.

What changes when the unit is a percent

In one worked comparison the weekly-and-daily MACD values spanned -33.56 to +36.59 while the matching percentage oscillator spanned -2.94 to +3.07.

On a longer-horizon chart the percentage form keeps moving up and down, whereas the absolute MACD form can remain nearly unchanged for extended stretches. Moving averages were computed from closes, so signals are judged against closes, and a calculation window of at least 250 periods was described as needed for more accurate spreadsheet values.

Percentage oscillator levels can be compared across securities and across long intervals even after price has doubled or tripled, which the absolute MACD form does not support in the same way.

Russell 2000 weekly PPO versus the faster daily stack

Over these thirty sessions the slower weekly PPO barely budged, holding near 1.6 to 1.8 percent of the 130-day average, while the daily PPO crossed from a 0.51 percent discount to a 0.84 percent premium and lifted the combined relative daily line from 1.24 to 2.59. A trader watching the stack would have seen daily upside momentum accelerating inside an already positive weekly regime. Every point is taken from the article’s Russell 2000 calculation spreadsheet.
Over these thirty sessions the slower weekly PPO barely budged, holding near 1.6 to 1.8 percent of the 130-day average, while the daily PPO crossed from a 0.51 percent discount to a 0.84 percent premium and lifted the combined relative daily line from 1.24 to 2.59. A trader watching the stack would have seen daily upside momentum accelerating inside an already positive weekly regime. Every point is taken from the article’s Russell 2000 calculation spreadsheet.Russell 2000 · Daily · 2015-05-13T00:00:00.000Z to 2015-06-24T00:00:00.000Z

The author warns that these exponential averages are still settling; a seed of 250 bars or more would have been more accurate.

Bounded readings the percentage stack cannot supply

The weekly-and-daily percentage price oscillator cannot mark overbought or oversold conditions because its readings are not range-limited. The relative strength index and the stochastic oscillator are range-limited and are therefore better suited to that task.

The relative strength index is a bounded oscillator built from ordered price observations over a defined lookback, used to locate overbought and oversold zones that an unbounded percentage momentum line cannot mark. The stochastic oscillator locates price within a lookback range and is therefore suited to overbought and oversold readings that unlimited-range percentage momentum cannot supply.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
78 of 80 in the MACD track
201846-54 pp.Next on MACDConstructing a weekly and daily percentage price oscillatorThe oscillator is built from four exponential averages of one price series: a weekly-fast and weekly-slow pair plus a daily-fast and daily-slow pair.
All readings on this track · 80 readings
  1. 1988Rebuild MACD-Mo and MACD-H before treating them as signals
  2. 1989Four-span MACD lookbacks as perishable parameters
  3. 1989Weekly then daily MACD confirmation on individual stocks
  4. 1991Regime-gated MACD and stochastic rules inside a checklist
  5. 1991Constructing MACD signal lines and divergence tests
  6. 1991MACD parameter order and cycle phase lag
  7. 1992Lengthened bond MACD as an equity regime filter
  8. 1992Long-horizon MACD construction from paired exponential averages
  9. 1993Constructing a signed ten-point trend filter
  10. 1994Constructing lag-reduced double exponential averages for MACD
  11. 1994Seeding DEMA2 filters to build a MACD signal
  12. 1994Constructing MACD from lag-reduced exponential averages
  13. 1994TEMA1 from nested exponential averages, then a two-horizon MACD
  14. 1994Constructing entry and exit on a relative-strength MACD
  15. 1994Constructing a relative-strength MACD crossover spreadsheet
  16. 1995Consensus presignal filters for Relative Strength Index, MACD and the Stochastic oscillator
  17. 1997Confirm the MACD turn with price, then exit on the histogram
  18. 1997Reconstructing a stochastic oscillator, MACD, and a triple-smoothed oscillator
  19. 1997Moving-average windows before crossovers and MACD
  20. 1999Second-stage MACD on relative-strength inputs
  21. 1999Constructing MACD from exponential-average spreads for crossover and divergence
  22. 1999Coding candlesticks into numeric indicators
  23. 2001Second-low confirmation with a percentage oscillator and money-flow filter
  24. 2001Constructing MACD from exponential average spreads and a signal line
  25. 2002Separate bounded and trend-following oscillator rules
  26. 2002Sort the regime before assigning MACD and stochastic jobs
  27. 2002Building classic divergence filters from RSI and MACD
  28. 2002Weekly highs and lows as trend gates
  29. 2002Constructing channel-normalized Fisher reversal signals
  30. 2002Affine-price and the Fisher transform as a constructed companion to MACD
  31. 2003Regularized EMA construction with a MACD line and a thrust oscillator
  32. 2003Curvature-penalized exponential averages versus MACD
  33. 2003MACD, moving averages, and a trend filter as one timing system
  34. 2003Fractional MACD and linear-regression reversal construction
  35. 2004Weekly MACD-histogram timing of bear-market rallies
  36. 2004Candlestick triggers filtered by MACD divergence
  37. 2004Staging energy-complex tops with trendline, breakout, and MACD
  38. 2005Selling climax holds versus fails
  39. 2006Treat a sideways Wave as permission before a breakout
  40. 2007MACD with a Stochastic oscillator for spotting trend reversals
  41. 2007Rebuilding an S&P 500 fifth-wave count after a broken target
  42. 2007Constructing MACD, RSI, and stochastic confirmation for futures
  43. 2007MACD histogram divergence needs a confirming close
  44. 2007Write the plan as a stack: ratio, boundary, then oscillators
  45. 2008MACD divergence and Stochastic oscillator confirmation on lumber futures
  46. 2008Assign confirmation, timing, and a stop before a currency pair is tested
  47. 2008Confirm the ten-bagger launch path before the MACD exit
  48. 2008Reading the offloaded evidence file
  49. 2008A Leader companion for MACD direction warnings
  50. 2008Relative strength exits with MACD averages and RSI
  51. 2008Assign one job per indicator in a three-screens rule set
  52. 2008Sequencing RSI, MACD, and average crossovers
  53. 2010Constructing the Schaff Trend Cycle from MACD and a dominant-cycle window
  54. 2010Schaff Trend Cycle as a MACD and Stochastic oscillator combination
  55. 2010Combining Relative Strength Index, the stochastic oscillator, and MACD as slope filters
  56. 2010Short-term wave and ratio clues without direction calls
  57. 2010A precise pullback entry and an unplanned profit-protection exit
  58. 2010Filtering MACD false signals with trendline breaks
  59. 2011Vendor feeds as an input variable in a MACD evaluation
  60. 2012Out-of-the-money versus in-the-money option sensitivity to implied volatility
  61. 2012MACD window tuning as hold-time control
  62. 2012Combining a moving-average crossover with MACD and support-resistance
  63. 2012Testing a published MACD entry with a histogram and signal-line agreement filter
  64. 2012Treat sample systems as a lab before live rules
  65. 2013Constructing moving averages and MACD from one price series
  66. 2013The next-bar price that forces a MACD signal-line cross
  67. 2013Constructing next-bar MACD reversal prices
  68. 2013Constructing inverted MACD reversal prices
  69. 2014Shared-filter combinations of the stochastic oscillator, MACD, and RSI
  70. 2014Square-root lookbacks for combined MACD and RSI
  71. 2015Audit open interest and trend before trusting oscillator crossovers
  72. 2016MACD without a signal line, confirmed by moving-average trend filters
  73. 2016Use RSI, MACD, and a moving average as a market-health consensus
  74. 2016MACD line versus histogram is a display problem first
  75. 2017Weekly and daily MACD on a single daily chart
  76. 2017Weekly and daily MACD as a stacked momentum filter
  77. 2017Nested weekly and daily MACD from paired EMA spreads
  78. 2018Weekly and daily PPO scale versus MACD, with bounded RSI and stochastic readings
  79. 2018Constructing a weekly and daily percentage price oscillator
  80. 2020Constructing Wyckoff tape reading with MACD, moving-average, and RSI filters
By fieldIndicators and filters682 readingsBy year201898 readings
All 115 readings tagged MACD
Also on MACD5 readings
1995Consensus presignal filters for Relative Strength Index, MACD and the Stochastic oscillator2002Separate bounded and trend-following oscillator rules2007Constructing MACD, RSI, and stochastic confirmation for futures2007Write the plan as a stack: ratio, boundary, then oscillators2010Combining Relative Strength Index, the stochastic oscillator, and MACD as slope filters