Here is an chart comparing my smoothed MACD using Laguerre polynomials. I have seen a few implementations of this using difference indicators.
It performs similar to a faster MACD, but is relatively unaffected by gaps. Remember that even a standard MACD is not to be used for determining overbought and oversold conditions. What it excels at is determing momentum, and divergences in price patterns.
How to use a MACD.
"Developed by Gerald Appel in the late seventies, Moving Average Convergence-Divergence (MACD) is one of the simplest and most effective momentum indicators available. MACD turns two trend-following indicators, moving averages, into amomentum oscillator by subtracting the longer moving average from the shorter moving average. As a result, MACD offers the best of both worlds: trend following and momentum. MACD fluctuates above and below the zero line as the movingaverages converge, cross and diverge. Traders can look for signal line crossovers, centerline crossovers and divergences to generate signals. Because MACD is unbounded, it is not particularly useful for identifying overbought and oversold levels."
What is a MACD really?
"MACD oscillates above and below the zero line, which is also known as the centerline. These crossovers signal that the 12-day EMA has crossed the 26-day EMA. The direction, of course, depends on direction of the moving average cross. Positive MACD indicates that the 12-day EMA is above the 26-day EMA. Positive values increase as the shorter EMA diverges further from the longer EMA. This means upside momentum is increasing. Negative MACD indicates that the 12-day EMA is below the 26-day EMA. Negative values increase as the shorter EMAdiverges further below the longer EMA. This means downside momentum is increasing."
It's a moving average cross over system. It's not magical or revolutionary as some would have you believe. Doesn't mean you can't improve upon it.
Here is a chart comparing a Standard MACD with the normal parameters and the fast MACD using settings thanks to 2latino. While the signals are comparable, you should notice the distoration of the standard MACD created by the gap down at the begining of the chart.
And a few charts with the smoothed MACD, on various chart types.