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What is the difference between MACD and the Percent Price Oscillator (PPO)? Both are momentum oscillators that produce similar lines. MACD shows the absolute difference between the 12-day and 26-day exponential moving averages. PPO takes MACD one step further by showing the percentage difference between these two moving averages. Even though the resulting lines look the same, one can compare PPO values for a variety of securities. MACD values cannot be compared. This is why we show the PPO in our Gallery Charts.
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MACD values are influenced by the price of the underlying security. MACD for the Dow usually fluctuates between +250 and -250 because the Dow Industrials is priced above 10,000. MACD for Intel usually fluctuates between -1 and +1 because Intel is priced around 20. It is not possible to compare MACD levels with these two securities.
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The Percent Price Oscillator (PPO) takes MACD one step further. MACD is simply the 12-day EMA less the 26-day EMA. PPO divides this result by the 26-day EMA. This shows the moving average difference as a percentage of the larger moving average. It is now possible to compare PPO values for securities with large price difference.
Turning back to Intel and the Dow Industrials, we can see that the PPO for Intel fluctuates in a larger range than the PPO for the Dow. This is most likely because Intel is more volatile that the Dow. Also notice that the PPO for the Dow is above 1 and the PPO for Intel is below 1. This suggests that upside momentum for the Dow has been stronger over the last few weeks. You can read more on the Percent Price Oscillator (PPO) in our Chartschool article.
