The Moving Average Convergence Divergence (MACD) indicator tracks the gap between two moving averages of a price. It shows whether a trend is gaining or losing speed. A slower average of MACD, called the signal line, is drawn alongside it.
On SPY (the S&P 500 exchange-traded fund, or ETF), MACD has crossed its signal line 717 times since March 1993. That is about 21 crosses a year. This guide works MACD out by hand on SPY. It then tests the textbook rule, which reads each cross as a signal, on 33 years of SPY prices and on 15 funds.
What is the MACD indicator? MACD (Moving Average Convergence Divergence) is the gap between a 12-day and a 26-day exponential moving average of a price. Both averages give the most weight to recent days. MACD is drawn with a 9-day average of itself, called the signal line, to show when a trend speeds up or slows down.
A crossover comes when the MACD line moves above its signal line (bullish, pointing to rises) or below it (bearish). On SPY, the S&P 500 ETF, there were about 21 a year from 1993 to 2026.
In the month after bullish crosses, SPY's median return was 1.56%. After bearish crosses, it was 1.21%. After all days, it was 1.44%. To test this, the same number of days was picked at random, many times over. Both cross results sat inside the range those random picks gave, so the gaps are no bigger than chance.
About half of SPY's crosses (53.8%) were reversed by the opposite cross within 10 trading days. These quick reversals are called whipsaws.
What is MACD? The MACD line, signal line and histogram
Gerald Appel developed MACD in the late 1970s, according to StockCharts' ChartSchool and the American Association of Individual Investors (AAII).
MACD is built from exponential moving averages (EMAs). An EMA is an average of recent closes that gives the most weight to the latest day. What Is a Moving Average? explains how it is built.
MACD has three parts:
The MACD line: the 12-day EMA minus the 26-day EMA. It is above zero when the faster average is above the slower one.
The signal line: a 9-day EMA of the MACD line.
The histogram: the MACD line minus the signal line, drawn as bars.
A cross of the MACD line above the signal line is called bullish, meaning it points to rising prices. A cross below is bearish.
MACD is a momentum gauge: it measures how fast a price trend is moving. The Relative Strength Index (RSI) is another momentum gauge, covered in What Is RSI?
How MACD is calculated: a worked example on SPY
Each day, an EMA moves part of the way from its last value toward the new close. The 12-day EMA moves 2/13 of the gap, about 15%. The 26-day EMA moves 2/27, about 7%. The 9-day signal line moves 2/10.
SPY close, 2026 | Price ($) | 12-day EMA ($) | 26-day EMA ($) | MACD line | Signal line | Histogram |
|---|---|---|---|---|---|---|
29 September | 764.20 | 765.70 | 764.08 | 1.619 | 1.458 | 0.161 |
30 September | 762.63 | 765.23 | 763.97 | 1.254 | 1.417 | −0.163 (bearish cross) |
1 October | 763.99 | 765.04 | 763.97 | 1.062 | 1.346 | −0.284 |
2 October | 769.64 | 765.74 | 764.39 | 1.351 | 1.347 | 0.004 (bullish cross) |
5 October | 774.83 | 767.14 | 765.17 | 1.976 | 1.473 | 0.503 |
6 October | 779.09 | 768.98 | 766.20 | 2.782 | 1.735 | 1.048 |
Source: YX Insights
The table shows SPY from 29 September to 6 October 2026. On 6 October, SPY closed at $779.09. The 12-day EMA moved 2/13 of the way from $767.14 toward that close, to $768.98. The 26-day EMA moved 2/27 of the way from $765.17, to $766.20.
The MACD line is the difference: 2.782, shown as 2.78. The signal line moved 2/10 of the way from 1.473 toward it, ending at 1.73. The histogram is 2.78 minus 1.73, or 1.05.
The table also shows a crossover each way. On 30 September, the MACD line fell below the signal line, so the histogram turned negative. On 2 October, the MACD line moved back above, by 0.004.
These figures use prices adjusted for dividends, as does the test below. Charts built on raw prices show slightly different values.
MACD on SPY in 2025 and 2026
Source: YX Insights
Chart 1 shows SPY's price above and its MACD below, from January 2025 to 6 October 2026. The two lines crossed 43 times in that span.
The MACD line's deepest point came on 8 April 2025, at −16.77. That was SPY's lowest close in the chart, after US tariffs announced on 2 April. By 6 October 2026, the MACD line was back at 2.78, with SPY at $779.09.
Does the MACD crossover work? How the test is set up
The textbook rule reads a bullish cross as a sign of rises ahead. The test checks this on SPY from 1993, then pools 15 US-listed funds: the S&P 500, the Nasdaq-100, small companies, developed markets, nine sectors, gold and long Treasuries.
Funds avoid survivorship bias, the error of testing only on winners that lasted, because no fund in the set was picked for doing well. The rules:
A cross counts on the day it happens, using that day's close.
The return runs from that close to the close 21 trading days later, about one month, with dividends counted.
Each result is set against the return after all days, the base rate.
Costs and tax are ignored.
On SPY, crosses came a mean of 11.8 trading days apart, so one cross's month often overlaps the next. Pooled crosses also bunch in time. Since 2005, 15.9% of them came on a day when at least four other funds crossed the same way.
MACD crossover results: the month after a cross vs all days
Source: YX Insights
Chart 2 shows the median return in the month after each kind of cross. On SPY, it was 1.56% after bullish crosses and 1.21% after bearish ones. After all days, it was 1.44%. Across the 15 funds pooled, the three figures were 1.14%, 1.04% and 1.15%.
The means were close too: 0.86%, 0.84% and 0.97% on SPY. There, 63.3% of bullish crosses were followed by a gain, against 64.4% of bearish ones. For all days, the share was 65.7%.
Could chance explain the gaps? To check, the test picked 357 SPY days at random, the same number as the bullish crosses. It did this 10,000 times. In 90% of these draws, the median month fell between 1.09% and 1.79%.
The same check on the pooled funds gave 1.03% to 1.28%. The bullish and bearish results, on SPY and pooled, all sit inside these ranges. So the gaps are no bigger than chance.
Over 33 years, the crossover on its own did not separate better months from worse ones on these funds. The test cannot speak for other settings, other markets or MACD used with other tools.
MACD whipsaws: how often the lines cross
A whipsaw is a signal that reverses soon after it appears. Here, it means the opposite cross came within 10 trading days, about two weeks.
Source: YX Insights
Chart 3 shows SPY's crosses in each full calendar year from 1994 to 2025. The mean was 21.1 a year. The fewest came in 2022, with 15. The most came in 2006, with 30.
Of SPY's crosses, 53.8% were reversed within 10 trading days. Across the 15 funds, the figure was 51.9%.
The latest SPY pair is one: a bearish cross on 30 September 2026, reversed on 2 October. Each switch would have meant a trade, with costs this test ignores.
The MACD histogram: what it shows
The histogram's bars grow while the gap between the two lines widens. They shrink as the two lines come together, so the histogram turns before a crossover. It crosses zero on the day of the cross.
Three recent SPY lows show what a turn can and cannot do:
2020: the histogram bottomed on 16 March, five trading days before SPY's low on 23 March. SPY fell another 6.5% after that turn.
2022: the histogram bottomed on 2 September, 27 trading days before the low on 12 October. SPY fell another 8.7%.
2025: the histogram bottomed on 8 April, the day of the low itself.
Since 1993, SPY's histogram has turned up from below zero 809 times, about 24 times a year. A turn shows a fall slowing. It does not show the fall is over, as 2020 and 2022 show.
How to read MACD
It lags. MACD is built from averages of past closes, so it confirms a move after it starts. In 2020, the bullish cross came on 26 March, when SPY was already 17.2% above its low.
It is measured in dollars. A bigger MACD can mean a higher price or bigger swings, covered in What Is Volatility? SPY's MACD of −16.77 in April 2025 was 3.4% of its price. In October 2008, the MACD line's low was smaller in dollars, yet 8.8% of SPY's price. So compare MACD as a share of price across years.
MACD is the gap between a 12-day and a 26-day EMA, read with a 9-day signal line and a histogram. On SPY, it crossed its signal line about 21 times a year. On SPY and across 15 funds, the month after a cross looked much like any other month.
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Common questions about the MACD indicator
What does the MACD indicator tell you?
MACD tells you whether a price's recent trend is speeding up or slowing down. It is the 12-day exponential moving average minus the 26-day one. When the MACD line rises above its 9-day signal line, the recent trend is gaining strength. When it falls below, the trend is losing strength.
What are the best settings for MACD?
This guide cannot name a best setting, because it tested only the standard one. The standard settings are 12, 26 and 9: a 12-day and a 26-day exponential moving average, plus a 9-day signal line. StockCharts' ChartSchool calls them "the typical settings used with the MACD". The test covered 15 funds, SPY among them.
What is the MACD histogram?
The MACD histogram is the MACD line minus its signal line, drawn as bars. The bars grow as the two lines move apart. They shrink as the lines come together, so the histogram turns before a crossover. On SPY, it turned up from below zero 809 times since 1993, about 24 times a year.
Is MACD a reliable indicator?
On its own, the MACD crossover gave little edge in this test. In the month after a bullish cross, SPY's median return was 1.56%, against 1.44% after all days. After a bearish cross, it was 1.21%. Medians from the same number of days picked at random often landed as far from 1.44%. So the gaps are no bigger than chance. Costs were ignored.
How often does MACD give signals?
On SPY, the MACD line crossed its signal line about 21 times a year from 1993 to 2026, 717 times in all. About half of those crosses, 53.8%, were reversed by the opposite cross within 10 trading days, about two weeks. Such quick reversals are called whipsaws.
DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.