Post #1875 by mapg on the Mechanical Investing board

Investment Strategies / Mechanical Investing

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Last night my timing signal was:
Potential recession, obey SMA sell signal.

yes confusing it is.

Keep in mind this known thing about SMA trend following.

Criteria that Refute- Moving averages do well in trending markets but they generate many false signals in choppy, sideways markets.

Description- After a crossover is identified, it is considered "not yet confirmed". Then additional confirmation is sought by watching the slope of the moving average.

Example; The "Economic Modern Family" (@MarketGauge.com) is a combination of one market index and 5 varying sectors & groups for "Market Analysis".

Three or four of the following have sideways trends while the three market ETF are seeing 52wH.

Modern Family:        Symbol:    Status:*     Confirmed:  Roles: (leading indicators that act as a guide for the stock market macro picture)
S&P 500 Index           .SPX      Bullish         Yes     - major U.S. market index
Russell 1000EW          EQAL      Bullish         Yes     - gauge the health of many Large-cap & Mid-cap companies within the U.S.
Russell 2000            IWM       Bullish         Yes     - gauge the health of many Small-cap & some Micro-cap companies within the U.S.
Transportation          IYT       Bullish       Not Yet   - measure Industry & Manufacture strength - supply and demand
Retail                  XRT       Bullish         Yes     - measure strength economy and consumer confidence
Regional Banks          KRE       Bullish       Not Yet   - measure the health of financial system in the U.S.
BioTech                 IBB       Bullish       Not Yet   - highly speculated: assesses where money is flowing
SemiConductor           SMH       Bullish         Yes     - innovation: a major player technology trends
As of (LastD)           ---      16-May-24    16-May-24                                           ---

GD_

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