I use this chart in the post to move out of very long term 401k money when there is a monthly close -1.5% (or greater) below the 40mma. Most Bear drops are -45% to -55% (-50% average) below the highest peak value of the last Bull Market. So in the current case, 3400 minus -45% to -55% is 1,870 to 1530 (average 1,700). I would re-enter the SP500 at approx. 1,700-1,870. This worked in the Bear Markets of 2000-2003 and 2008-2009. The only thing that I have changed with time and experience doing this is where to re-enter the market. In the past I have tried re-entry at a monthly closing candle above the 20 mma (month moving average) and also tried the 40mma. The problem with re-entries above those closing monthly moving averages is, the market burns up to much gain getting to those points. So now I just re-enter at -45% to -50% below the last Bull Market high.
Thank you, that makes sense. I appreciate the reply, often people just post information with no context so I like to know if they actually believe what they're posting or just doing it out of pure boredom/entertainment.
%% I would not do it based off a [-20% correction off DOW/DIA] or 40ma monthly chart, which is about $ 270 on SPY.I use a 50 period ma more; IBD uses a 40 ma ................................ AS weak as DOW/DIA is ; I prefer a weaker group or ETF. Another problem for the DOW+ tax cuts can help =XOM, CVX
I was just being a smart ass with that comment. That was rude of me. My second post was more professional
%% That 2nd part of his headline is more professional also; SPY/S&P 500 is more professional/benchmark than DOW. LOL However the way the media reports it, DOW is pretended to be more important.LOL