BUY SIGNAL !

OCTOBER 30, 2015 ….Market Close

SPY ended October at $207.93 which is 1.6%….. above it’s 200 day simple moving average of $$204.59.

According to my SPY 200 day Month End  Model, a buy signal has been triggered telling me to go ” ALL IN “. in SPY.

The last Buy Signal for SPY under this model was valid for 921 days ( December 30, 2011 – August 31, 2015 ) and returned a total of 69.02% including dividends and distributions.

There have only been 6 trades since the Buy Signal of February 29, 2000.  All Buys were winners except the Buy Signal triggered on March 28,2002 which became a Sell Signal just one month later, resulting in a loss of 5.82% for the round trip.

If you had followed this model since January 2000,  your total return would have been 280.02% versus 103.29% ( Buy and Hold ).

If you had ignored the month end rule  and bought and sold SPY every day SPY  crossed its 200 day moving average, you would have been involved in 61 trades and 46 of them would have been losers. !!

I subscribe to a back testing service,” ETF Replay” , and I am relying on the accuracy of  their data for my trading.

Please don’t rely on my advice because I have no licence to give it.  I am merely showing you what I do as an alternative to the Buy and Hold advice given by  ” heavyweights ”  such as  Warren Buffet and John Bogle of Vanguard.  I am using the same index, the S&P 500, but adding the concept of mechanical trend following.

As stated in my very first Post…all this is intended to do is share with those who are new to IRAs and ETFs,  my  alternative to my  putting myself in the hands of someone who could expose my savings to the higher risk of individual stocks without indicating the difference in magnitude between the “specific risk”  of individual stocks and SPY’s  much lower “market risk”.

 

Richard Maurice Gore

 

 

Leave a Reply