In part one , we saw how using the 10 month moving average against the SPY , can help us avoid bear markets. Another way to avoid potential bear markets , is to count the number of stocks in the S&P 100 that are still above their 200 moving average. You can do this by looking for the specific index tracking this data ( S1TH in Tradingiew.com). I first heard of this strategy from Mr. Carlucci. You can read more about it here.
Depending of their risk tolerance, investors may enter and exit the market when a certain percentage of stocks are above or below their 200 ma. For this post we'll use the following rules
BUY SPY if :
SITH > 65 ; 65 % of stocks in the S&P 100 are above their 200 ma
SELL SPY if :
S!TH < 55 ; 55% of stocks in the S&P 100 are below their 200 ma