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July 21, 2012 / redman59

Another SPX Timing Strategy on the Simplest of Levels, The One I Recommend to Friends

This another post to a simple yet effective SPX market timing strategy. I will I admit that this is nothing that I found but was brought to my attention by @SPYder_Crusher, a former blogger on iBankCoin and respectable trader on many levels. One thing that he mentioned and that really caught my attention was the consecutive quarters lower. Highlighted is that two consecutive quarters higher is a bull market and two consecutive quarters lower is a bear market. Looking at the charts I could not agree more. While this is in no way my discovery, I wanted exploit it and show the effectiveness of it. In a recent blog I highlighted how the 10 period exponential moving average on a monthly chart shows great entry and exit points for longs and has beaten the market from the longest data points I could exploit. This strategy has far fewer trades and is less mental capital intensive.

Below you will find the excel table of the entry and exit price with dates as well as the points gained and the percentage gain. All points are based on a close of the quarter as I believe an investor/trader could get these prices based on having an idea of the signal price or placing a limit order on it as the open of the the next day or so would trigger an entry/exit.

A trader can see form the timeline that the signals are not that often and can create that mental relief. Also, one has to note the signal during some of the most volatile times in which my opinion are the recent decade and during that time this system has triggered 3-4 times. I really like to stress mental capital as anyone that know if your friends are in the market and they know what you are doing, they will ask you “what do I do”. This system is very simplistic and yet effective going back to the 60’s and incorporating many market destructing events. Honestly this is the one I turn my friends to as they and I can follow very easily with little effort….and it saves many questions/headaches on so many ends. From my prior post “One For the Friends..Simple SPX Timing Strategy”, if you have friends that have money allocated you know how many questions you get and if the they cannot trade often, via retirement rules, this system will alleviate that barrier.

Below are the charts with buy/sell signals. The arrows would not directly line up to the bar so go back 1/2 or to the previous bar. Remember this is a quarterly chart so the signal happens after the 3 month period. The first chart covers the 1960’s – 1980’s and the second chart covers the 1980’s to Current, with the last chart showing all signals.

As a trader can see, this is an effective and easy to follow system. I recommend this system to all else to friends as it can reduce the noise and I can show them the results and that they don’t have to be that active in the market. Below are some links to the information that Danny aka @SPYder_crusher has shared in his findings from most recent to least recent.

http://spydercrusher.com/2011/08/22/how-oversold-are-stocks-really-are-we-there-yet/

http://spydercrusher.com/2011/08/01/the-ultimate-confluence-why-a-bounce-is-near-certain-yet-we-also-confirm-the-double-dip/

http://ibankcoin.com/spyder_crusher/2010/05/17/quarterly-warnings/

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