Mark Shipman in his book "Big Money Little Effort," describes a system for deciding when to invest and when to sell in a long-term trading strategy. He uses a 30 week and 50 week moving average, and advises a sale when the longer term MA crosses above the longer term and a purchase when the opposite cross-over occurs. As I show above, the system would have worked quite well in the period since 1990, warning in quite good time of all the Bears and signalling the Bulls. It would have missed some short term fluctuations, some of which I have boxed in the chart. In my previous analysis, due to inexperience, I drew MAs based on Monthly rather than Weekly periods, which would have been far too slow to be of use. Despite working reasonably well, there is, nevertheless, a time-lag, and the system does not flag a reversal in advance. The comment of Hillelzacay on my previous post is pertinent to the present time.
