The recent stock-market crash caught most traders by surprise. True enough, many fundamental analysts and economists have long-been warning about the market being overdue for a correction, but none of them could say exactly when it was going to happen. Well, all of the eggheads were outsmarted by a simple technical indicator — the PPO, or Percentage Price Oscillator.
PPO is a lot like MACD. In fact, the Absolute Price Oscillator (APO) is essentially MACD on a slightly different scale. But PPO takes things to another level and has certain advantages over MACD. So with that in mind, is MACD obsolete? Maybe. MACD didn’t do a lot to predict the market’s recent crash, while PPO did.
But what exactly is PPO and how do you use it? Read on and watch the video to find out.
In this episode, you’ll learn:
- All about Price Oscillators and the difference between APO/MACD and PPO (0:44)
- How APO and PPO are calculated (1:44)
- The advantages of using PPO instead of APO or MACD (1:46)
- How to use and interpret a PPO histogram (2:27)
The video also looks at how PPO predicted the crash of early May 2010, and shows you how to use PPO with stockcharts.com.
In conclusion, the recent stock market crash should give PPO some extra credibility, as the indicator clearly predicted the crash. PPO is a lot like MACD, but has certain advantages discussed in this video. And on top of everything else, it’s easy to use — just follow the steps in this video.
CEO, Wealthpire Inc.
P.S. Next week we’ll look Hanging Men and Hammers — two single-day candlestick formations that accurately predict reversals. See you then!