Friday, November 21, 2008

Best Six Months - Investment Strategy

According to the Stock Trader's Almanac, just staying invested in the stock market for the best six months and then switching into fixed income for the other six months had produced reliable returns with reduced risk since 1950.

Wow! So which is the best six-month period of the year?

Yes! November to April. Remember “Sell in May and go away!

So how do I decide when to enter and exit during this best six-month period?

1. Use the MACD signal.

2. Starting in Oct, monitor and wait for the MACD to turn positive, then enter the next day.

3. Starting in April, monitor and wait for the MACD to turn negative, then exit the next day.

4. If the market is down trending, entry is usually delayed until the market turns up, while exit point can come a month earlier. In 2007, the MACD turned positive on November 28, 2007 for S&P 500.

5. Use the MACD signals only to enter and exit as the market's favourable (October/November) and unfavourable (April/May) seasons approach. All other MACD signals through the year should be ignored.

Hmm... I shall use this together with my other Stock Market Forecast tips to Beat the Market!

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