MACD represents the interaction of two moving averages. The long-term moving average is 26 days, the short-term is 12 days. When prices accelerate from either a trough (which is a drastic price decline) or a retracement (a more healthy movement sideways which doesn't violate that basic rules of uptrend), the shorter-term moving average overtakes the longer term one, crosses over it, and moves beyond.

The difference between the long-term and short-term moving average is the fast line, drawn in red. The MACD Histogram gives you a way to determine its strength. A smoothing (or rate of change) of this line is the slow line (drawn in blue).

When the fast line crosses above the slow line, prices are diverging and accelerating on the upside. Divergence simply means a significant change in behavior.

When a crossover occurs, it's examined to see whether it occurs above or below the centerline. Crossovers below the centerline are ignored. A stock is deemed weak if the gravity of the retracement (or trough) is serious enough to pull the MACD lines below center. Strong stocks stay above center for years at a time. Those that get hit hard enough to pull the lines below center are therefore deemed not worthy of consideration.

So, crossovers below center are ambiguous.

What happens when a crossover occurs below center? It is not ignored completely. The crossover could have occurred just a touch below center, and one more day might carry it forward enough to "go positive." Once things go positive, a signal is raised. This is not a strong signal. Crossovers that originate below center must be taken with a grain of salt. But currently, we are not throwing them out.

Again, look at the graphs. If a stock's where the MACD lines are below center and you can see declines in the price graph, it is clearly time to look elsewhere.

Crossovers above center are flagged if the rate of divergence (between the fast and slow lines) is significant. This gives birth to a green bar.

Timing is everything. Ignore price action at your peril. What you should get out of the green and red striping is a clue to whether you should wait, or whether it's time to jump. Urgency, or worrying about missing out should never have to enter the equation. That's the goal.

When the fast line crosses below the slow line, prices are diverging on the downside. This can cause a red trending bar to be born. The exception is if this cross below occurs above the centerline. This usually indicates that a trend is either pausing or simply slowing down.

Cross-belows that occur below center cause a red bar to immediately be raised. This mirrors birthing of green bars on crossovers above center.

A cross-below that occurs above center is noted. The signaler then waits to see if the progression takes the MACD lines below the centerline, or whether a rapid breakdown in prices occurs. If either event occurs, a red bar is raised. This mirrors action on the cross-above side of the equation.