Best 6 months & MACD

Best 6 months and MACD

 

05-06-2014, 10:43 AM | Post #3539907

See how it works below.

To see when to sell look here

April 20 had MACD at a buy signal, you need to wait for the next sell signal. Looking at the chart...it's today.
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As you are probably already aware, after decades of historical research, we discovered that most of the market’s gains occur during the months November through April. An analysis of the average gains for each month shows that November, December, January, March and April have been outstanding months since 1950. Add February and our “Best Six Months” strategy is born.
Market timer Sy Harding, in his book, Riding The Bear, took our November-through-April strategy, enhanced it, and termed it the “Best mechanical system ever.” He simply used the MACD indicator developed by our old friend Gerald Appel to enter the “Best Six Months” period up to several weeks earlier, if the market was in an uptrend. Conversely, Harding would exit up to several weeks later as long as the market kept moving up.
The key here is using the MACD indicator in conjunction with other tools like our “Best Six Months” strategy to confirm or assist in timing, buy and sell decisions. So once we enter April or October we begin tracking MACD.

This is what Sy Harding says:

http://www.streetsmartreport.com/sts.html
We discovered that those best days on average are October 16 for the entry into the market for its favorable seasonal period, and April 20 for the exit from the market’s favorable season. However, those are just the best days as averaged over a very long time period.Obviously the market does not begin a rally on the same day each year, or begin to decline from a top on the same day each year. And recognition of that obvious fact is the most important aspect of our strategy.
So we then concentrated on determining a means by which the entries and exits could be more accurately pinpointed for each individual year.
The result was our Seasonal Timing Strategy, or STS.
Since the market does not begin or end its positive period on the same day each year, we combined the market’s best average calendar entry and exit day with a technical indicator, the Moving Average Convergence Divergence indicator, or MACD. It is a short-term momentum-reversal indicator developed by Gerald Appel in the 1980s, designed to signal when the market has begun either a short-term rally, or a short-term correction. 
The idea is that if a rally is underway when the October 16 calendar date for seasonal entry arrives, as indicated by the MACD indicator, we will enter at that time. However,if the MACD indicator is on a sell signal when the October 16 calendar date arrives, indicating a market decline is underway, it would not make sense to enter before that decline ends, even though the best average calendar entry date has arrived. Instead, our Seasonal Timing Strategy simply waits to enter until MACD gives its next buy signal, indicating that the decline has ended.
We use the same method to better pinpoint the end of the market’s favorable period in the spring. If MACD is on a sell signal when the calendar exit day of April 20 arrives, we exit at that point. However,if the technical indicator is on a buy signal, indicating the market is in a rally when April 20 arrives, it makes no sense to exit the market just because the calendar date has arrived. So our Seasonal Timing Strategy’s ‘exit rule’ is to simply remain in the market until MACD triggers its next sell signal indicating the rally has ended.


http://www.stocktradersalmanac.com/sta/research_tool_MACDEntryExitDOW.jsp

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