INTERVIEW


Monitoring The Markets

Gerald Appel & The MACD

by Jayanthi Gopalakrishnan


Gerald Appel is perhaps best known as the inventor of the MACD, the popular moving average convergence/divergence indicator. However, he is also the founder of Signalert, a registered investment advisory company; editor of Systems & Forecasts, a newsletter read by money managers, analysts, and private investors worldwide; and an established author and lecturer. His articles have appeared in Smart Money, Money magazine, Barron's, and STOCKS & COMMODITIES; he is also the author of 10 books on investment and market timing. Finally, Appel has been cited by numerous financial publications and is a regular guest on various financial news networks.

The moving average convergence/divergence indicator is a statistical stock market timing model and technical analysis tool that is widely respected and used by traders, investors, and money managers. How is the MACD handling the current markets? STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan spoke with Appel via telephone on July 9, 2003, to find out.

Put most of your emotional energy into the creation of your indicators, rather than trying to guess the market, and you'll probably come out ahead.

Can you tell us how you got started in trading?

I started out as a personal trader. We're going back a long way -- we're talking about the mid-1960s. And from my personal trading, it kind of evolved into my doing articles for various magazines relating to investment, and then a series of books relating to investment, and then ultimately to the establishment of my own market planner and money management firm.

Is that what you do now -- you have a newsletter and you manage money?

Yes, Signalert Corp., which I founded in 1973, publishes a newsletter called Systems & Forecasts, which has been in publication now for 30 years. We also manage, along with affiliated companies, approximately $580 million of client capital.

Can we talk a little bit about the MACD, or moving average convergence/divergence? What led you to develop that indicator?

I guess I was just looking for new indicators! I was looking for a quality indicator that would be readily interpretable, that would not create so many whipsaws as to be confusing, and that would still be relatively simple to maintain. MACD was originally invented in about 1977, but the way I use it has evolved over the years.

How?

Well, we use different time frames for different sets of parameters for buying and selling. It works better when you don't use one parameter. Generally, it should be easier to buy and somewhat harder to sell, because of the way the market moves. Then there's the original description of MACD, which had no particular references to divergences; it used different combinations of time frames than we use nowadays to a certain degree, and by and large we've improved our interpretation of the indicator patterns over the years.

...Continued in the September 2003 issue of Technical Analysis of STOCKS & COMMODITIES


Excerpted from an article originally published in the September 2003 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2003, Technical Analysis, Inc.



Return to September 2003 Contents