10-Month Moving Crossover Strategy
At the beginning of the year, we liked the chances for the “Donut Portfolio” to break its 10-year losing streak against the S&P 500. As a refresher, the Donut holds six of seven key assets in equal weights. The S&P 500 is excluded—a decision probably only suitable for allocators who are self-employed.
In an effort to manage stock market risk, we monitor reams of data relating to the economy, earnings, Fed policy, and investor sentiment, along with technical indicators of all stripes. But for the rare occasions when upside price action seems practically uncapped, it’s hard to beat pure price action if one is inclined to play along.
There’s no question that it’s been a rough couple of years for stock market technicians. We noted earlier that if February 19th stands as the final high of the bull market, it would be only the third time in the last 100 years that the NYSE Daily Advance/Decline Line failed to provide at least a few months’ advance notice of the oncoming bear.