Friday, December 20, 2013

The ABC Indicator of Movements in the S&P 500

In attempting to cut my risk in the financial markets during the past decade or so, I have built and maintained dozens of indicators, focused on comparatively broad equity-market indexes in some cases and on comparatively narrow stock-market sectors in other cases.

The ABC Indicator of movements in the S&P 500 (INDEXSP:.INX) has been the most successful of these indicators. In forecasting the short-term direction of the U.S. large-capitalization index on a closing basis, its signals have been right on 94 occasions, or 71.21 percent of the time, and wrong on 38 occasions, or 28.79 percent of the time.

I mention this indicator here and now because I am beginning the first public test of it on J.J.’s Risky Business. The test will encompass 10 signals, starting with the Buy signal flashing this Friday morning. History suggests the indicator will be right between six and eight times and wrong between two and four times. I can’t wait for the results!

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Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.