Day Trading Ideas, MACD crossover signals - Buy Alibaba Group (BABA) stock and sell General Electric Company (GE) stock.
Moving Average Convergence Divergence (MACD) is one of the most popular momentum indicators used by Wall Street traders. It can be used to identify buy/sell signals in the market and today's most popular MACD trades include Chinese e-commerce giant Alibaba (NYSE:BABA), industrial conglomerate General Electric (NYSE:GE) and telecom major Verizon (NYSE:VZ). But, before we dive into the details, it's important to understand what exactly is the MACD indicator and how does it work. As per Investopedia, "The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals." Any crossovers involving the MACD and the signal line are important buy/sell triggers. The next obvious question is: What are the MACD signals being flashed by today's top MACD trades and how should investors interpret them?
Buy Alibaba Stock, says the MACD
shares of Alibaba Group Holding Ltd. have been in a strong uptrend for the major part of this year. BABA stock is up by a whopping 86.7% year-to-date. In comparison, the Nasdaq Composite (INDEX:COMPX) is up by less than 16% while the S&P 500 (INDEX:SPAL) has gained a more modest 8.5% in the same timeframe. Can Alibaba stock continue its scorching run? Well, if the MACD indicator is anything to go by, the rally is far from over.
Alibaba stock technical chart just flashed a bullish MACD crossover in the last trading session. A bullish MACD crossover is one which sees the MACD line rise above the signal line, indicating that the stock is seeing rising near term momentum. Taking into consideration the recent bullish MACD crossover, the rally in Alibaba stock price should continue for the next few trading sessions.
More Pain For General Electric Company Stock Investors.
John L. Flannery led General Electric company has had a torrid year on the bourses. Shares of the conglomerate are down 21% this year, underperforming the broader markets by a wide margin. The shares slipped by nearly 1.4% in the last trading session. And, if the GE stock technical chart is to be believed, the downtrend is nowhere near the end. The GE stock technical chart flashed a bearish MACD crossover in the last trading session, which indicates that the pressure on GE stock price should continue in the near term.
Verizon Communications Inc. Stock Headed Lower
Our third MACD trade for today involves Verizon Communications, the telecommunication giant. Like General Electric company, the telecom major has had a bad year on the bourses, losing over 10% this year, while the broader markets have rallied in the same timeframe. And, like in the case of GE, the bears are not loosening their grip at this counter anytime soon. The Verizon stock technical chart saw its MACD drop below the signal line in the last trading session, forming a bearish MACD crossover. In other words, the downtrend in Verizon stock price should persist in the immediate future.
For more technical trading ideas based on other technical tools, do check out our daily trading ideas section. If you're also looking to discover fundamentally solid tech stocks, you should also check out our top stock picks from the tech sector, which have beaten the NASDAQ by 140%.