New TA/Charting, page-13565

The error in accepting positive divergence in the MACD.

Most chartist accept a positive divergence as an indication of some bullish nature if it occurs with respect to the share price but if you think about the way the MACD is derived it can be misleading.

After a savage drop in a share as has occurred with LTR it is usual for the 12 period ema to drop quickly leaving the 26 period ema "stranded". So we see what has happened initially on the chart. As the 26 period ema catches up with the 12 period ema, no matter what the sp does, it will appear as a rising ema and everyone thinks "Oh, bullish". It isn't, it is an anomaly created by the sudden drop in the sp which takes many periods to iron out and until that happens to use the MACD as an indicator is really basically misleading.

So many don't look at how an indicator is derived before using it blindly.