In the previous two posts, I talked about two different simple investment method that could help you avoid major market downturns. Both methods did great individually , However what would be the results if we combine them into one strategy ?
The first strategy only look at the SPY versus it's 10 months moving average . Based on the backtest results , we see that this strategy has been pretty successful over many decades. The second strategy uses the S1TH index, which measures the number of stocks above their 200 moving averages, to determine wether the condition to invest are ideal or not. The results for that strategy were also encouraging.
By combining the two strategies, we would create the following rules :
BUY IF SPY > 10ma AND S1TH > 65
SELL IF SPY < 10ma OR S1TH < 55
Here are the results from Jan2007 :
Return : 135 %
# trades : 4 ( round trip)
Profitability : 100 %
MAX DD % : 13.8 %
Again, since we only have data from 2007 for the S1TH index , the testing is very limited .However the results are very encouraging. Anyone can apply these very simple rules when investing, to protect their wealth and give you peace of mind.