Never heard of the MACD (pronounced mack-dee )? It s not on the dollar menu at your local Golden Arches, but rather a popular tool used by some traders to determine when to trade stocks. And recently, it s telling traders to buy.

The Moving Average Convergence Divergence tool (and now you know why traders use the acronym MACD) noted a buy signal for more than 500 stocks. The most popular MACD tracks how a stock moves up and down relative to the stock s 12-day and 26-day moving averages. On Feb. 16, MACD noted a buy signal for 513 stocks. The average trading day, by contrast, flashes just 50 buys, according to Schaeffer s Investment Research. If recent history s any indication, the next few months look pretty good for the stock market.

Schaeffer s computers run MACD calculations daily on a universe of 3,000 stocks, and last Tuesday was only the fourth time since Jan. 1, 2000, that the indicator showed a buy signal on more than 500 stocks. On the last two times, on March 12 and July 15 of last year, the market had hit a short-term bottom, Schaeffer s says. The Standard & Poor s 500 index returned 39% in the six months following March 12 and 22.8% in the six months following July 15, according to Schaeffer s. That perks up your ears, says Rocky White, senior quantitative analyst at Schaeffer s, which provides options trading and education for individual investors. The time before that was March 21, 2007, after which the market returned a respectable but less-stellar 5.9% over the next six months.

While the MACD is a popular tool for some traders, not everyone puts stock in such technical analysis. Ted Weisberg, a septuagenarian trader with Seaport Securities on the floor of the New York Stock Exchange, said he d never heard of the MACD. You can take all the MACD indexes in the world and they don t mean anything, because the stock market s 75% psychological.