Free Range Stocks

Combination Indicator

We can create a new "Combination" indicator by combining the following three indicators:
  1. NASDAQ NewHighs to NewLows Ratio
  2. S&P 500 Moving Average Slope
  3. S&P 500 New High Recently
Whenever any of the above indicators are bullish, the Combination signal is bullish. All three signals must be bearish before the Combination signal turns bearish. This makes this signal respond more slowly than its component parts, leaving you in the market more often which is generally a good thing. Please note the historical record shown below includes only one full bull-bear market cycle.

This signal originated and has been discussed at length on The Motley Fool's Mechanical Investing Forum where it generally goes under the name of the Bearcatchers. This link discusses this and many other timing indicators.

Historical Results

Since 2005, this signal has had the following results. Interest rates and transaction costs are both ignored, i.e. assumed to be zero.

Returns staying in the market the entire time
Total calendar days 3837
CAGR 5.13%
Maximum drawdown 56.8%

Returns using the Combination strategy
Total calendar days long the market 3238 (85.3% of the time)
Total calendar days sitting in cash 558 (14.7% of the time)
Overall CAGR (assuming 0% interest when in cash) 8.84%
CAGR while long the market 10.41%
Market CAGR while you sat in cash -21.24%
Maximum drawdown 19.8%
Average signals per year 2.19

CAGR while in:
 Date  Signal  Price  Days  Stock Cash
 2005-11-09 Buy 1220.65   
 2008-03-03 Sell  1331.34  845 3.8% 
 2008-08-11 Buy  1305.32  161 -4.4% 
 2008-08-20 Sell  1274.54 -62.0% 
 2009-01-09 Buy  890.35  142 -60.3% 
 2009-01-13 Sell  871.79 -85.4% 
 2009-03-25 Buy  813.88  71 -29.8% 
 2009-04-01 Sell  811.08 -16.5% 
 2009-04-02 Buy  834.38 17532.8% 
 2011-09-20 Sell  1202.09  901 16.0% 
 2011-10-19 Buy  1209.88  29 8.5% 
 2011-11-09 Sell  1229.10  21 31.5% 
 2011-12-06 Buy  1258.47  27 37.6% 
 2011-12-12 Sell  1236.47 -65.8% 
 2012-01-03 Buy  1277.06  22 71.0% 
 2015-11-12 Sell  2045.97  1409 13.0% 
 2015-11-25 Buy  2088.87  13 79.1% 
 2015-12-07 Sell  2077.07  12 -15.8% 
 2015-12-30 Buy  2063.36  23 -10.0% 
 2015-12-31 Sell  2043.94 -82.2% 
 2016-03-03 Buy  1993.40  63 -13.5% 
 2016-05-09 Sell  2058.69  67 19.2% 
 2016-05-12 Buy  2064.11 37.7% 
 Green is good.  Red is bad. 
Last updated: 10 March 2018
See Graph or Main Timing Screen for current indicator value.