Guide · Momentum
Does MACD Signal Cross work?
Across 375 stocks, MACD Signal Cross cut the worst fall on 79%, beat buying and holding on risk-adjusted return on 15% and on raw return on 13%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
The most common MACD signal: bullish when the MACD line crosses above its 9-day signal line.
- In when MACD (12, 26) is above its 9-day signal line.
- Out when it is below.
Momentum plays bet that what has risen most over the past months tends to keep outperforming for a while. The family guide
How to use it
- It trades often (about 20 switches a year per stock), so costs, spreads and taxes eat into it more than the backtest's 0.05% per switch suggests.
- Expect to be wrong more often than right: only 34% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It worked best on Micro caps (67% beat holding on risk-adjusted return) and worst on Consumer & retail (3%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
MACD Signal Cross did best against holding in the COVID drop (+21% median gap) and worst in the 2020–21 rally (−25%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| MACD Signal Cross | +14% | −11% | +21% | −25% | +7% | −11% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Micro caps | 67% | +0.11 |
| Big tech | 33% | -0.26 |
| Industrials & rentals | 33% | -0.15 |
| Real estate | 26% | -0.08 |
| Energy & power | 25% | -0.20 |
| Media & telecom | 20% | -0.20 |
| Software & devices | 15% | -0.28 |
| Indexes & ETFs | 14% | -0.13 |
| Industrials & materials | 12% | -0.22 |
| Healthcare | 11% | -0.28 |
| Semiconductors | 9% | -0.28 |
| Sectors | 8% | -0.22 |
| Financials | 8% | -0.17 |
| Metals & mining | 4% | -0.25 |
| Consumer & retail | 3% | -0.30 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
MACD Signal Cross holds 207 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.