No. of Recommendations: 3
per philosophicaleconomics the better timing method:
At the close on the last trading day of the month, calculate the year over year change in Real Retail and Food Services Sales (RRSFS, a measure of economic consumption) and the Industrial Production Index (INDPRO, a measure of economic production) as of the end of the previous month. The one month lag is required due to the delay in the reporting of these numbers.
If the YOY change in both indicators is positive, go long the S&P 500 (represented by SPY) at the close. In other words, no recession is signaled, so turn trend-following off.
If the YOY change of either indicator is negative, compare the S&P 500 (SPY) to its 10-month moving average. If the S&P 500 will close above the average, go long SPY at the close, otherwise move to cash. In other words, possible recession is signaled, so rely on price to confirm. Note that this is the same trend-following rule used in Meb Faber’s classic GTAA.
Hold positions until the final trading day of the following month
