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|Subject: Re: Moving from S&P to Stable Value Fund||Date: 7/12/2013 5:43 PM|
|Author: Rayvt||Number: 72601 of 76621|
The 21 day EMA, and the 8,55 or 8,34 EMA crossovers work pretty well. For IWM, the 21 day EMA works well, but still, there are some losing trades. Nothing is perfect. Average annual return for the 21 day EMA timing is 9.11%, while untimed it is 7.39%. Major drawdowns are eliminated. This is since 5/28/2000 which is the first day of data on Fasttrack, and I assume the first day of trading.
Here's a bit I read a while ago and re-read periodically:
I don't really think it matters which trigger is used as no single trigger can be the best for all times but they can be effective which is the priority as I see it. Here effective is simply defined as avoiding the full brunt of a large decline. Aside from my belief in its effectiveness, the 200 DMA is simple to explain and understand.
No one rule is always correct. they all give false signals.
True bear markets start slowly giving many months to get out as was the case in both 2000 and late 2007 into 2008. Fast declines, or panics typically retrace quickly and are better bought than sold for someone who is a trader.
It does not make sense to try to sell now before any indicator is triggered because (repeated for emphasis) there may not be a recession. It makes more sense to heed a trigger in the market for defensive action because in addition to it being objective and simple, stocks will turn down before the next recession, whenever that is, as a function of normal market behavior; capital markets turn down before the economy. Also if somehow there was a recession but stocks did not go down there would be no reason to sell.
"Simple is better, because simple is more robust."
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