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October 4, 2012 / redman59

Revisiting this SPX Quarterly Strategy

The end of September marked the end of 3rd Quarter.  With that I wanted to go back and see how this easy to follow SPX Timing Strategy is performing.  Clicking on this link will take you to my original post explaining the strategy and it has some other links at the bottom from the person that originally brought this to my attention, @SPYder_Crusher.  But if you don’t feel like clicking on the links, the strategy is easy.  Buy on 2 consecutive quarterly closes higher and sell on two consecutive quarterly closes lower; key word being consecutive.  Going back you always had the chance to get in because the quarterly close was undercut at some point in the future, so a buy limit order would work.

My plan is to update this at the end of each quarter which should be fairly easy considering it would only be 4 times a year.  Below you can see the chart going back over 50 years of SPX data courtesy of FreeStockCharts.   Green arrows are buys and red arrows are sells.  Click on the chart for a larger view with notes added.

Looking at the chart you can see the buy and sell triggers. Below I put the entry and exit dates with their prices and their respective points and percentages gained.

I still find this to be one of the best timing strategies out there from an easy to follow perspective that has outperformed buy and hold and from a psychological standpoint.  With the speed of technology, markets, and just the overall pace of people’s lifestyles today it is easy to get caught up when you see things selling off.  Following this for a retirement fund or as a trading system can keep an investor/trader somewhat relaxed knowing  that this is a system with over 50 years of data that has performed well in all types of markets.  A recent example of this can go back to the Spring of 2012.  A daily chart of the SPX is below highlighting the volatile 2nd Quarter.  Go back and remember what the sentiment was like and how you were feeling about the market at the time from a psychological and forward looking subjective standpoint.  This SPX Quarterly System would have kept you in causing you not to panic and what would have been a loss is now a gain as of end of market 10/04/2012.

This system was also recently referenced in a post I wrote on September 10, 2012 titled “Looking Back, We’re at a Prior Significant Level“.

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