Contact: David West
News Bureau
Northwestern State University
Natchitoches, LA 71497
(318) 357-6466

10/29/98

FOR IMMEDIATE RELEASE

NATCHITOCHES - A well-known technical indicator of the stock market could be beneficial over several months to investors and managers who wish to use it. The indicator, the moving average convergence divergence (MACD) was examined in a research article by Dr. Carroll D. Aby Jr. dean of the College of Business and professor of finance at Northwestern State University. The article, "An Intermediate-Term Approach to Trading Common Stocks: A Pension Fund Perspective," has been published in the Journal of Pension Planning and Compliance.

The MACD was used by Aby to develop approaches to selection and trading of common stocks on an intermediate-term basis. Aby conducted his research to assist pension fund managers and asset managers in individual equities participation over a time frame of months as opposed to short-term investment horizons of a few days or longer-term outlooks of several years.

A moving average of the MACD was used as a signal line to formulate trading rules resulting in buy and sell signals. According to Aby, the MACD research was an excellent indicator of intermediate to longer-term stock price trends, and displayed excellent predictive capabilities as a leading indicator of price trend reversals.

Aby contends that by following the methodology developed in the research, investors could earn attractive profits over a period ranging from several months to one to two years. Major upturns and downturns in the indicator plotted graphically yielded warnings of momentum changes and resulting technical strength of weakness, Aby said. Research also depicted different approaches to detection of overbought and oversold levels in different stock prices, according to Aby.

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