S&P 500 & Nasdaq Analysis and Trends

[Stock]

Best Six Months Strategy

Gerald Appel recommends an 8-17-9 MACD to generate buy signals and a 12-25-9 MACD to confirm a sell signal for a stock, which has had a strong bullish move.
Dow MACD Signal Date (Exit) 2006 - 3-Apr-06 @ 11,144.94
S&P 500 MACD Signal Date (Exit) 2006 - 3-Apr-06 @ 1297.81
NASDAQ 500 MACD Signal Date (Exit) 2006 - 8-Jun-06 2060.18

If invested $10,000 in January, 1950:

Dow MACD Signal Date (Exit) 2006 - 3-Apr-06 @ 11,144.94
56-Year Return May -October - ($6,646)
56-Year Return November - April - $1,548,088
56-Year Return Buy & Hold - $525,130

http://www.hirschorganization.com/default.asp?action=entry_exit_dow

S&P 500 MACD Signal Date (Exit) 2006 - 3-Apr-06 @ 1297.81
56-Year Return May -October - ($3,343)
56-Year Return November - April - $1,078,831
56-Year Return Buy & Hold - $734,834

http://www.hirschorganization.com/default.asp?action=entry_exit_sandp

If invested $10,000 February 8, 1971:

NASDAQ 500 MACD Signal Date (Exit) 2006 - 8-Jun-06 @ 2060.18
34-Year Return May -October - ($7,178)
34-Year Return November - April - $666,744
35-Year Return Buy & Hold - $236,172

http://www.hirschorganization.com/default.asp?action=entry_exit_nasdaq

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Applying the MACD Indicator to Our “Best Six Months” Strategy

There are a number of software packages available that have MACD calculations built into them. At the Hirsch Organization we use Telescan’s Wallstreetcity for our MACD entry and exit signals in and out of the “Best Six Months,” November through April.

As you are probably already aware, after decades of historical research, we discovered that most of the market’s gains occur during the months November through April. An analysis of the average gains for each month shows that November, December, January, March and April have been outstanding months since 1950. Add February and our “Best Six Months” strategy is born. These six consecutive months gained 9221.61 Dow points in 50 years while the remaining May through October months gained only 1299.03 points.

Market timer Sy Harding, in his book, Riding The Bear, took our November-through-April strategy, enhanced it, and termed it the “Best mechanical system ever.” He simply used the MACD indicator developed by our old friend Gerald Appel to enter the “Best Six Months” period up to several weeks earlier, if the market was in an uptrend. Conversely, Harding would exit up to several weeks later as long as the market kept moving up.

The key here is using the MACD indicator in conjunction with other tools like our “Best Six Months” strategy to confirm or assist in timing, buy and sell decisions. So once we enter April or October we begin tracking MACD.

The following MACD definition is excerpted from Telescan’s Wallstreetcity website. We have also included illustrations of the most recent seasonal MACD buy and sell signals for the “Best Six Months” along with the actual entry and exit points back to 1950. Remember, the MACD signals are taken from the Dow Jones industrials while the actual trades are made using the S&P 500.

http://www.hirschorganization.com/default.asp?action=macd

Gerald Appel recommends an 8-17-9 MACD to generate buy signals and a 12-25-9 MACD to confirm a sell signal for a stock, which has had a strong bullish move.