MARCON has 7 status levels.
To reach status 1, the monthly, weekly, and daily MACD cycle indicators must all fail to meet two criteria Another way to think of it is the market having a maximum of 6 points, and if none are met, then the status drops to 1 (rather than an actual 0).
The 'MACD (moving average convergence divergence) line – the '12 EMA (exponential moving average) minus the 26EMA, and whether the MACD line above/below the zero line.
MACD histogram, status whether positive/negative cycle
*for those not familiar with the MACD, I strongly suggest you do a little reading on it. There is plenty of good info' out there.
Chart'1 highlights the two MACD criteria, as seen on the monthly cycle, although it is exactly the same for the smaller weekly and daily cycles.
The following table outlines the MARCON status level, the colour codes, equity cycle, and associated MACD criteria/parameter.
Table 1.0 - 3 pairs of criteria, for 3 time frames
What about other criteria?
Deciding on what criteria to use was difficult, and more than anything, I wanted to keep MARCON as simple as possible. In particular, I wanted something that took account of the bigger time frames..and not get overly lost in the day to day trading noise.
Key issue – the Monthly cycle out-guns the Weekly and Daily cycles
It is very important to keep in mind the following rule...
-If one or both monthly criteria are met, the weekly/daily criteria are not considered relevant.
This is based on the philosophy that the monthly cycles are far more important than the smaller cycles. Of course, the huge monthly cycles are slow behemoths, and they turn very infrequently, but when they do turn/issue a signal, are very important to consider.
So, MARCON is a 7 status level system, with 3 pairs of criteria, as based on the daily, weekly, and monthly cycles. Monthly cycles over-rule the daily and weekly cycles if one or both criteria are met.
Page last updated – 23/5/2016