Monday, January 18, 2010

Moving Average Crossover Index - MACI

What is Moving Average Crossover Index (MACI) ? You may say that you'd never heard of it. You are  correct that the MACI term does not exist even I tried to google it. I guess I just made it up and created a new acronym.

My definition of MACI is the as follow:

MACI = (FastMA - SlowMA) / SlowMA * 100


Let's use FCX with the daily chart and identify the numbers of the simple moving averages at the closed of Jan 15, 2009 using MA-4 (4 days) and MA-39 (39 days).

The numbers are: MA-4 = 85.08, and MA-39 = 83.34.

Then use these numbers and plug in the follow MACI equation I created it (I am sure other people have been using this method and nothing is new)

MACI = (MA4 - MA39) / MA39 * 100

maci = (85.08 - 82.15) / 82.15 * 100
maci = 3.56

During the trending market, the higher the number of MACI, the trendier the underline equity will be (in theory and nothing is guaranteed). If I can only select one equity over the other, I would pick the one with higher MACI and continue to monitor its trend.

There are two ETFs currently with its MACI is much higher than FCX. These are TUR and ECH and its MACI are 10.81 and 9.53 respectively. On my simulated Traders Pick portfolio, I will replace FCX with either one of these two ETFs tomorrow (Jan 19, 2010) at the market closed and see how it will play out.

1 comment:

  1. Hi,

    Why are your guys using a 12% stop ? Why not use the crossover ?