A.I.M. Users Bulletin Board

[SFSecurity]

Hi Gang, Following up on looking for indicator for market bottom I tried EMA, 4, 6, 8, 10, and 12 intervals.

4 EMA shows the market change direction two months after bottom and stays that way through the end of 2009 with a couple of dips in 2010 for SPY. 6 EMA takes 3 months and stays that way until May of 2010. It then recovers above the EMA in July, 2010. 8 EMA takes three months as well, but SPY goes up the next month and then finally EMA stays below the current price until May of 2010 and then recovers. 10 EMA takes 5 months for the current price of SPY to pass above the EMA price and stays there until June of 2010 where it dips for one month and then stays above the EMA as far as my chart goes, October 2012. 12 EMA takes until July 2009 to dip below the current price and then dips again in June of 2010, current recovers in 3 months and the EMA stays below current price until August of 2011 and then recovers in two months and stays below the current price until the end of my chart in October of 2012.

I'm guessing, based on this data, that a combo of the 6 EMA and 12 EMA is the best indicator that the bottom has passed. The 6 is a bit to volatile to be a reliable indicator but the 12 delays things a couple of extra months. I'm also guessing, given the bull market history over the last 60+ years, that the minor dips are of no great consequence as bull markets typically last an average of 58 months.

I'm not sure how this coordinates with Orcroft's method but one might consider using both as indicators of when to start getting back into the market.

Best,

Allen