Revisiting this SPX Quarterly Strategy

355 views

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“.

Looking Back, We’re at a Prior Significant Level

360 views

Over the weekend I was going through some charts and then decided to pull up a long-term chart of the $SPX. The time frame is a monthly chart going back to our last signficant top in 2007. What I like about these longer term charts is that they can be simple and reduce a lot of noise as far as looking at the candle body and buying/selling tails. What I found interesting about where our price was on Friday’s close is the reference to where it is at to the prior price action. I drew a line at the level of interest as I saw this as a good support and resistance line (currently showing 1437.92)

Some notes about support and resistance and why I chose this level:

  • this is an area and not to-the-penny
  • “Ifa support or resistance level is broken, it signals that the relationship between supply and demand has changed” -StockCharts
  • serves as an awareness and I use it as a risk allocation

Specific to chart:

  • SPX broke out in April 2007 and the highlighted level was tested multiple times in 2007 and held, closing above each time
  • Closed below the highlighted level January 2008
  • May 2008 high tested the highlighted area and failed, candle pattern was confirmed to down side the next month
  • Nearly 4 1/2 years later we are testing that highlighted area again

Looking at this chart we can see that some churning can be expected as we are at a past signficant area. Stated in a bullet above, support/resistance can be used as an awareness. I personally would look for lighter allocation here as I expect some volatility to pick up. We are at an area of indecisiveness and I find it hard to have a major bias on direction here. I am looking for around a 5% pull back (around 1370) before adding more exposure. I am also watching to see how the market reacts on a volatility basis with a pull back. Also keep in mind your time frame. This would hold more weight to longer-term holdings and in deciding to take profits or allocate more on a portfolio basis. This would not hold as much significance to day or swing traders looking for those quick-hit trades. This mostly serves as an awareness to expect some indecision.

If you are interested in easy to follow longer term timing methods, I have written two previous articles that show two methods that have beaten the SPX. This was at the time of their writing and have not been updated since (both written 5/21/2012).

Timing using Monthly Time Period

Timing using Quarterly Time Period

Day Didn’t Work Out But Took A Short Trade Instead

625 views

Today did not work out the way I wanted.  Last night I named some stocks that I liked in a post naming AAPL, ADI, AMZN, CMG, EAT, & V.  Waking up I saw the SPX trading near +13pts and I just laughed and said “well there goes that plan”.  The only stock that saw weakness was EAT.  Seeing weakness in this name in a strong tape I decided to just stand aside and wait until the end of day to see how it performed, in which it formed a nice hammer after 3 strong up days.   The other stocks were acting well and I missed the morning dips in AAPL, AMZN, & V.  I will still be focusing on the hourly chart in these names to look for some type of entry.

With my focus stocks running I stood aside and instead towards the end of day I took a short position in SPY via puts.  I still maintain my bullish outlook but also believe that a dip is warranted and look to make some coin off this dip while adding some long positions.  That’s the plan anyway.  One indicator that I like to pay attention to for overbought/oversold markets is the McClellan Oscillator.  I like to look at the +200/-200 levels for extremes and having these be stalling or retracement levels.  Below is a chart of the SPX for the last year with highlighted points in where the McClellan Oscillator reached the +200 level.

So with the evidence in the above chart and the nice rally we have seen I decided to try to capitalize on a retracement while maintaining my bullish stance and looking to get in some long positions.  I decided to keep it simple by adding some SPY July puts to my account that was all cash.  The position remains small compromising 5% of my overall account as tomorrow we have Bernanke and the FOMC minutes and I have no desire to allocate a larger short bias position.

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

1,268 views

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/

 

 

 

 

 

 

 

 

One For the Friends..Simple SPX Timing Strategy

1,906 views

When it comes to down markets and volatility like we are seeing lately I get questions from friends at work on what they should do.  I am sure if your friends know what you do you get many questions as well and at times it can be quite daunting as it is not your money but they are asking questions that concerns their money. This is one system that I tell them to trade that utilizes the monthly chart and the 10 period exponential moving average.  It is really no secret but I like to lay out some raw numbers concerning it using charts and the eye, no backtesting software here.  I like this system for a couple reasons:

1) its not trade active but on a end of month basis
2) any free charting software can follow it

So if you have friends point them to this easy system.  For example I have several friends that utilize the Thrift Savings Plan or TSP (the government retirement fund).  In this they can only make two asset allocations per month switching from one fund to the other.  Some for those that want to allocate to the C Fund (benchmark to the SP500) I reference them to this system.  It trades on an end of month basis so it only incorporates one trade.  This is just an example to how one can inform friends but the main goal of this strategy is to REDUCE NOISE.  I have been paying attention to the markets since 2006 and trading since 2007 so while I don’t have the experience of 1987 or 2001, I did go through the 2008 into 2009 fuckery, an experience I cherish.

This is easy to follow and reduces that mental strain that many can experience.  I remember many friends telling me they were pulling out of the market in early 2009 and sat out most of 2009-2010.  I can’t blame them either because who knew what the hell would happen.  But some simple free software and 1 line could point them in the right direction.

Below are the results from excel that are taken from the charts.  It encompasses the date you would go long based upon a close above the 10 period exponential moving average to the date you would exit based upon a close below the 10 period exponential moving average.  I chose the close because going into the month it seemed likely that you would know if it would close above/below the 10 period exponential moving average.  Also if you did receive a signal, one could place a limit order as on all times I witnessed the next day provided a price above or below the signal price.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From the backtest of prices one could see that the 10 period exponential moving average system does outperform in all market conditions.  What I really like to focus on is that last years as they represent more volatility and confusion among investors/traders.  Many focus on monetary capital but one has to remember the mental capital as well.  This is why systems like this pay off in my opinion.  I remember how many friends were asking me what to do and why I would I buy here.  My simple answer is history and data has shown me this works and this is what I will follow.  Yes I will be wrong but I do not know the future and all I can do is follow what has worked in the past.

Below is charts posted by the decade with buy and sell signals (with the last signal) starting from the 70’s (the longest Worden would go back).  The arrows would not directly line up to the bar so go back 1/2 or to the previous bar.  At the bottom is the overall picture.

 

 

 

 

 

 

Revisiting this SPX Quarterly Strategy

355 views

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“.

Looking Back, We’re at a Prior Significant Level

360 views

Over the weekend I was going through some charts and then decided to pull up a long-term chart of the $SPX. The time frame is a monthly chart going back to our last signficant top in 2007. What I like about these longer term charts is that they can be simple and reduce a lot of noise as far as looking at the candle body and buying/selling tails. What I found interesting about where our price was on Friday’s close is the reference to where it is at to the prior price action. I drew a line at the level of interest as I saw this as a good support and resistance line (currently showing 1437.92)

Some notes about support and resistance and why I chose this level:

  • this is an area and not to-the-penny
  • “Ifa support or resistance level is broken, it signals that the relationship between supply and demand has changed” -StockCharts
  • serves as an awareness and I use it as a risk allocation

Specific to chart:

  • SPX broke out in April 2007 and the highlighted level was tested multiple times in 2007 and held, closing above each time
  • Closed below the highlighted level January 2008
  • May 2008 high tested the highlighted area and failed, candle pattern was confirmed to down side the next month
  • Nearly 4 1/2 years later we are testing that highlighted area again

Looking at this chart we can see that some churning can be expected as we are at a past signficant area. Stated in a bullet above, support/resistance can be used as an awareness. I personally would look for lighter allocation here as I expect some volatility to pick up. We are at an area of indecisiveness and I find it hard to have a major bias on direction here. I am looking for around a 5% pull back (around 1370) before adding more exposure. I am also watching to see how the market reacts on a volatility basis with a pull back. Also keep in mind your time frame. This would hold more weight to longer-term holdings and in deciding to take profits or allocate more on a portfolio basis. This would not hold as much significance to day or swing traders looking for those quick-hit trades. This mostly serves as an awareness to expect some indecision.

If you are interested in easy to follow longer term timing methods, I have written two previous articles that show two methods that have beaten the SPX. This was at the time of their writing and have not been updated since (both written 5/21/2012).

Timing using Monthly Time Period

Timing using Quarterly Time Period

Day Didn’t Work Out But Took A Short Trade Instead

625 views

Today did not work out the way I wanted.  Last night I named some stocks that I liked in a post naming AAPL, ADI, AMZN, CMG, EAT, & V.  Waking up I saw the SPX trading near +13pts and I just laughed and said “well there goes that plan”.  The only stock that saw weakness was EAT.  Seeing weakness in this name in a strong tape I decided to just stand aside and wait until the end of day to see how it performed, in which it formed a nice hammer after 3 strong up days.   The other stocks were acting well and I missed the morning dips in AAPL, AMZN, & V.  I will still be focusing on the hourly chart in these names to look for some type of entry.

With my focus stocks running I stood aside and instead towards the end of day I took a short position in SPY via puts.  I still maintain my bullish outlook but also believe that a dip is warranted and look to make some coin off this dip while adding some long positions.  That’s the plan anyway.  One indicator that I like to pay attention to for overbought/oversold markets is the McClellan Oscillator.  I like to look at the +200/-200 levels for extremes and having these be stalling or retracement levels.  Below is a chart of the SPX for the last year with highlighted points in where the McClellan Oscillator reached the +200 level.

So with the evidence in the above chart and the nice rally we have seen I decided to try to capitalize on a retracement while maintaining my bullish stance and looking to get in some long positions.  I decided to keep it simple by adding some SPY July puts to my account that was all cash.  The position remains small compromising 5% of my overall account as tomorrow we have Bernanke and the FOMC minutes and I have no desire to allocate a larger short bias position.

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

1,268 views

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/

 

 

 

 

 

 

 

 

One For the Friends..Simple SPX Timing Strategy

1,906 views

When it comes to down markets and volatility like we are seeing lately I get questions from friends at work on what they should do.  I am sure if your friends know what you do you get many questions as well and at times it can be quite daunting as it is not your money but they are asking questions that concerns their money. This is one system that I tell them to trade that utilizes the monthly chart and the 10 period exponential moving average.  It is really no secret but I like to lay out some raw numbers concerning it using charts and the eye, no backtesting software here.  I like this system for a couple reasons:

1) its not trade active but on a end of month basis
2) any free charting software can follow it

So if you have friends point them to this easy system.  For example I have several friends that utilize the Thrift Savings Plan or TSP (the government retirement fund).  In this they can only make two asset allocations per month switching from one fund to the other.  Some for those that want to allocate to the C Fund (benchmark to the SP500) I reference them to this system.  It trades on an end of month basis so it only incorporates one trade.  This is just an example to how one can inform friends but the main goal of this strategy is to REDUCE NOISE.  I have been paying attention to the markets since 2006 and trading since 2007 so while I don’t have the experience of 1987 or 2001, I did go through the 2008 into 2009 fuckery, an experience I cherish.

This is easy to follow and reduces that mental strain that many can experience.  I remember many friends telling me they were pulling out of the market in early 2009 and sat out most of 2009-2010.  I can’t blame them either because who knew what the hell would happen.  But some simple free software and 1 line could point them in the right direction.

Below are the results from excel that are taken from the charts.  It encompasses the date you would go long based upon a close above the 10 period exponential moving average to the date you would exit based upon a close below the 10 period exponential moving average.  I chose the close because going into the month it seemed likely that you would know if it would close above/below the 10 period exponential moving average.  Also if you did receive a signal, one could place a limit order as on all times I witnessed the next day provided a price above or below the signal price.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From the backtest of prices one could see that the 10 period exponential moving average system does outperform in all market conditions.  What I really like to focus on is that last years as they represent more volatility and confusion among investors/traders.  Many focus on monetary capital but one has to remember the mental capital as well.  This is why systems like this pay off in my opinion.  I remember how many friends were asking me what to do and why I would I buy here.  My simple answer is history and data has shown me this works and this is what I will follow.  Yes I will be wrong but I do not know the future and all I can do is follow what has worked in the past.

Below is charts posted by the decade with buy and sell signals (with the last signal) starting from the 70’s (the longest Worden would go back).  The arrows would not directly line up to the bar so go back 1/2 or to the previous bar.  At the bottom is the overall picture.

 

 

 

 

 

 

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