Sarah,
That's why I'd rather use 60 and 200day EMA instead of 50 and 200day SMA. The crosses using 50 and 200day SMA is referred as either "Death or Golden" cross depends on the direction of crossing. However, using 60day EMA may minimize a chance of a false trigger: i.e. For the last 15 years of SPX chart, I only identified one occasion that continued bull market after the trigger pulled the market down for roughly 20% correction during 2011. Even for that case, if the exit and reentry was done promptly, I'd done much better than just using 'Buy and Hold" strategy.
On Thu, Sep 10, 2015 at 2:21 PM, sarah_oz@yahoo.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:
Sarah,I typically monitor 60-days EMA and 200-days EMA for 'Buy and Sell" indicator. These two trend line crosses seem to be more reliable for me. For the last 15 years, if you used these crosses as buy and sell decision for SPX, you would outperformed the market with a significant margin. What do you think about it?
I agree that using these indicators as buy and sell signals for the indices themselves is worthwhile in trending markets. (That is, buying when the index moves above the indicator and selling when it moves below the indicator). However, in general, by the time of the "death cross" much of the downside has already occurred. For example, consider that the Shanghai index just hit its death cross yesterday, after a downward move of over 44%.
The S fund signaled a death cross in Oct 2014 while the index was rallying.
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Posted by: Paul <ur12bfriend@gmail.com>
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