Early this summer, I wrote a post on Absolute Momentum, and how it could help you find stock that are trending. I've showed the results of the strategy, when applied to a 60/40 ETFs portfolio. I also provided an indicator which gives you the option to choose the assets to calculate absolute momentum.
In this post , I would like to test this strategy on the S&P 500 component, and see if we would get similar results as the 60/40 ETFs portfolio.
Knowing when the U.S Economy is a recession is very important to all market participants. There's many option to track recession , but most of them can be complicated and simply don't have the time to go through all the details .If you are like me , you simply want a snapshot and make your decision within seconds.
Once easy way to quickly read recession level for the U.S economy, is to plot unemployment level versus its 12 month moving average. You see , there 's no recession without unemployment being above its 12 month's average. Based on that information, I quickly plotted the information in my TradingView chart. The Code for U.S unemployment is FRED:UNRATE, data provided by Quandl.
As you can see, the chart highlights in red , recession periods from 1949 till today. It's not perfect , but as a busy person, this is all I need to know whether we are in a recession or not. Hope you will find this helpful.
Code and chart are available on the indicator/ Strategy page
The Sp 500 is now trading below its 200 ma. The S1TH , which tracks the number of stocks above their 200 ma , is now below 65 % , our minimum requirement to be in the market. Job number were ok , unemployment goes back up to 4.90 from 5.00 .
With this in mind , its time to close our position and stay on the sideline. We'll see how investors react to the upcoming elections this week. Risk Off .
P.S ....Going foward , the trades will be reviewed every 33 days , as oppose at month end only.