What is your opinion about various stock-based indicators like MACD, RSI and Stochastics?
Answered by Michael Cintolo, Editor of Cabot Market Letter and Cabot Top Ten Trader: Very good question. To be honest, I like to keep it simple—my charts just look at a stock’s price history, volume history, a couple of moving averages (especially the 50-day moving average) and the stock’s relative performance (compared to the market). All those “indicators” you mentioned are basically short-term overbought-oversold measures, which don’t carry much weight with me. That’s not to say they’re totally useless, but if you’re looking for intermediate- to longer-term profits, you want to know whether a stock is under accumulation or not. And MACD, RSI and the like don’t help you determine that.
