ISM Indicator As a Strategy

967 3 57
Here's a very easy code, plotting the ISM against the SPX             . In this exercise, i wanted to see if one could use the ISM indicator only to generate buy/sell signal, and what would be the performance.

What is the ISM

The ISM Manufacturing Index monitors employment, production inventories, new orders and supplier deliveries.By monitoring the ISM Manufacturing Index, investors are able to better understand national economic conditions. When this index is increasing, investors can assume that the stock markets should increase because of higher corporate profits. The opposite can be thought of the bond markets, which may decrease as the ISM Manufacturing Index increases because of sensitivity to potential inflation .

Buy/Sell Signal

ISM above 50 usually good economic condition and vice versa when below 50 . For this code I used 48.50 as my buy/sell signal line.


To test this on a longer time period, I use the SPX             index instead of SPY             . The results are surprisingly good. 76.92% profitability with 3.03 profit factor.


Investors could use the ISM with other indicators to determine better entry and exit point. I will see if combining the ISM with other custom indicators , could generate better result. Feel free to share your results here.



Remove from Favorite Scripts Add to Favorite Scripts
strategy("ISM Indicator Strategy ", overlay=true)

ism = security("MAN_PMI","M",close)

buy = ism > 48.50
sell = ism < 48.50

longCondition = buy
if (longCondition)
    strategy.entry("My Long Entry Id", strategy.long)
strategy.close_all(when = sell)

mid = 48.50

plot (mid, color = lime)
yup , Pretty straight forward and simple.
I noted that similarly Raoul Pal mentioned correlation 1 Dec15
+1 Reply
Raoul Pal - mention something similar six months ago
EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out