You can time the market.

[Zestilio]

Found an interesting piece. According to it, the method of timing the market is this: when the S&P 500 closes below its 300-day moving average, you sell. When it closes above its 300-day moving average, you buy.

There's a graph of S&P500 closing price vs its 300-day moving average, from 1997 to Aug 31, 2015.

https://imgur.com/n1SqSd0

That's right. It has closed STRONGLY below its 300 day moving average.

Thoughts?

 

[newwurldmn]

I just backtested this idea from 1929 (imputed SPX prices) to yesterday. Was the same as buy and hold except you miss out on dividends and create a lot more taxable events. the 300d moving average is a good sell signal, but not a good buy signal. buy the time you get a buy signal you have missed out some of the juiciest gains. Through most of the stock selloffs in the last 90 years you see the trend over and over again.

 

[wrbtrader]

You said its "not a good buy signal". Therefore, you saying its not profitable as a buy signal or you saying it is profitable as a buy signal but just not big profits that you refer to as juiciest gains. ?

 

[kut2k2]

I'd be interested in seeing how well this strategy compares to the golden cross and death cross strategy.

 

[Autodidact]

People, a little more creativity and skepticism please.

Anyone can pick a chart, play with moving average values and tell you after the fact, what should had been done.

 

[kut2k2]

People, a little more creativity and skepticism please.

Anyone can pick a chart, play with moving average values and tell you after the fact, what should had been done.

Of course but what do you expect? There is no backtest archive or database. There should be but there isn't. You pick up the average TA book and it doesn't even mention backtests for fear of pointing out just how bankrupt most of the book's content is. So elementary stuff like this thread will keep resurfacing simply because of the lack of information on what should be common knowledge. Not everybody has the means to perform backtests.

 

[newwurldmn]

You said its "not a good buy signal". Therefore, you saying its not profitable as a buy signal or you saying it is profitable as a buy signal but just not big profits that you refer to as juiciest gains. ?

I'm saying that all the gains made in shorting the market are lost waiting for the buy signal while the market rallies back (as it always does) but is still below the 300d moving average. Net you end up returning the long term market except you miss some dividends and you generate some taxable events.

I only did a cursory back test so there may be benefits/losses due to compounding and downdrift of pnl, etc.

 

[Autodidact]

Of course but what do you expect? There is no backtest archive or database. There should be but there isn't. You pick up the average TA book and it doesn't even mention backtests for fear of pointing out just how bankrupt most of the book's content is. So elementary stuff like this thread will keep resurfacing simply because of the lack of information on what should be common knowledge. Not everybody has the means to perform backtests.

You don't need a backtest to notice you can game indicator values on past data to make it look "grailish", you just need intelligence and experience.

This is how most market vendors and indicator developers feed off the dumb and/or inexperienced, the OP is a classic example.

 

[cdcaveman]

Need no techincal indicator to tell you things are so great

Don't need a weather man to tell which way the wind is blowing

 

[pak]

Need no techincal indicator to tell you things are so great

Don't need a weather man to tell which way the wind is blowing

Caveman's right... ex -CNBC reporter Ron Insana (now Trading Guru) just told us things are good-no need to worry...step in and BUY-BUY-BUY!!!!!!!!!!!!!!!!