Actively manage 401K using indicators

PNW_experiment

PNW_experiment

I am 53 and recently lost half my 401K due to divorce, so decided to try to actively manage (salvage) my 401K about 3 months ago. With the market where it is, I feel I need a jumpstart to move from "unconscious incompetence" to "conscious incompetence" and hope some of you experts would be kind enough to provide that kick.

I did a slew of research, downloaded JStock, and learned how to write indicators. My goal is to not lose much of my equity value during a bear market so am looking for some indicators that can help with the broader, longer market trends, such as:

Help signal a potential major trend down.
help signal a bottom of a bear market, ideally able to weed out counter trend rallies.

Currently am running some rules using S&P 500, but realize there may be some other choices here, perhaps complimentary.

I am really stuck on what timeframes I should be using in my rules, but open to any other suggestions on what rules I should write and run.

For instance, I currently have a downtrend rule to move from stocks to cash:

50 DAY MA < 200 DAY MA and PRICE < 200 DAY MA and 200 DAY MA SLOPE is negative.

Uptrends are proving more difficult to move cash to stocks:

50 DAY MA < 200 DAY MA and PRICE > 5 DAY AVG LOW PRICE and 50 DAY MA SLOPE is positive


Am I on the right track here? Should I use EMA's. Should I use 50 and 20 day periods to be faster, or a combination of a longer time-frame and shorter time-frame indicator? Maybe these in combination with CCI, MFI or RSI?

Thanks,

Tom
 
My best advice is to buy and sell 1 share of whatever until you learn what you are doing. Stay super small to minimize your losses, because you will have losses until you learn. This is not an easy game.
 
i doubt you will be successful in developing the working investment method that will allow you to time your moves

but whatever you do check you ideas not on days (it will take many years) but on minutes or hours ... it's faster this way... :)
 
Thanks. It is a 401K, though. I can only take money out of a fund - say a mid cap or large cap fund - and move it to another fund allowed in the 401K, like a bond fund or cash. The whole thing for me is to see if I can catch a major equities trend, sell it high, store it in cash (or bond), and then redeploy it back to the stock when it hits bottom and starts to move up again. (if historical bear pattern exists, this could be just two transactions a year to 18 months apart.)
 
PNW_experiment said:
Thanks. It is a 401K, though. I can only take money out of a fund - say a mid cap or large cap fund - and move it to another fund allowed in the 401K, like a bond fund or cash. The whole thing for me is to see if I can catch a major equities trend, sell it high, store it in cash (or bond), and then redeploy it back to the stock when it hits bottom and starts to move up again. (if historical bear pattern exists, this could be just two transactions a year to 18 months apart.)
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understood
what i mean is to use any charts , better index charts for testing purposes of paper trading

trend on 15 min has the same look as trend on 5 years
 
I been doing long term stocks using weekly bars since 1978, stocks don't do well using indicators other than a moving average and by time 50 goes below 200 ma, you have lost a great deal. Learning to trade is not an easy venture and having the internet actually makes it harder to learn and not easier cause it allow you to get quicker cause you are nervous than sit on your hands. Trading stocks long term is a mixture of trend, dividends and knowing how to use options. You want to trade stocks that have dividends so you make a little more, use options to make more by doing credit spreads, and can do covered calls when you anticipate mini correction or retracement, so think in terms of Price patterns of support/resistance, get charting book by Edwards/McGee and books by Bulkowski you will get good idea of price patterns for entries and a little about when to get out which is more important that getting in.

I would not trade until you have answers for any kind of question you can brainstorm. Learn by using Price when you need to be thinking to getting out, market is pretty good at alarming one if they can read the charts. I use indicators in Futures for most part, but still with my chart reading skills, they always are better than indicators. Long term MACD is best for me as it has lag, fast makes no sense if you trying to stay in long term.

Back test ideas, using weekly charts, you going to need fifty years of data to get good idea of stops and money management rules.
 
PNW_experiment said:
Thanks. It is a 401K, though. I can only take money out of a fund - say a mid cap or large cap fund - and move it to another fund allowed in the 401K, like a bond fund or cash. The whole thing for me is to see if I can catch a major equities trend, sell it high, store it in cash (or bond), and then redeploy it back to the stock when it hits bottom and starts to move up again. (if historical bear pattern exists, this could be just two transactions a year to 18 months apart.)
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If that is all you can do, I would look to see what funds lost the least in bad years while still doing ok in good years, market is too far along to make huge moves at this juncture.
 
@Handle123 That was more or less my question. To your point, by the time 50 goes back above 200 price is likely already way above. I already learned my lesson on patience and discipline as I tried a couple things during that longish channel between S&P 2039 and 2130 that just broke. For charts, I've been following https://twitter.com/ciovaccocapital but was hoping I could put some indicators in jstock, and have jstock send me an alert when my rules hit. (Jstock runs all the time and retests rules every 10 minutes.) I am aware of VIX and reverse ETF's as well, but will study your feedback further. Still, would changing my MA timeframes, perhaps, give me a quicker buy signal that 200 and 50?
 
Handle123 said:
If that is all you can do, I would look to see what funds lost the least in bad years while still doing ok in good years, market is too far along to make huge moves at this juncture.
More...

Right, that is a whole other question I am working separately on my own. I have already sold most of my mid and large cap at S&P 2039 and put it into prime money market. Now, trying to figure out what signal will alert me to start looking at charts again to redeploy it back to equities. Current facts are it is making lower lows and I want to be prepared for that if it keeps going.
 
There is no magic in indicators. They are all simply derivative of price.

You're taking your first baby steps on a very long and difficult path. Don't expect much, and don't get aggressive until you have a couple PROFITABLE years under your belt.

And you can always give your ex a call and explore reconciliation. She's worth a quick 100% gain, no indicators needed.
 
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