The NYSE tape has improved since year end with the NYSE advance / decline line and the S&P500 breaking to new highs. The only major technical impediment remaining was the failure of the Dow Industrials to the confirm last week’s 52-week high posted by the Dow Transports. The Dow confirmed on January 23 when IBM alone contributed 66.35 points to the total gain of 67.12 points
Last January 18 (see last post) our own TSX60 Index which has been in a “sell” mode since June 2011 issued a new “buy” signal. The model is a simple strategy with no math required. Set your “sell” at the lowest low of the past twenty six weeks. This is a moving 26-week window, so each week add the new week and drop the oldest week. The model “Sells” if the weekly price closes below the prior lowest 26-week low. The reverse is applied to the “buy” signal if the price closes above the highest 26-week high. The sector correlation on the S&P is higher than the sector correlation of the TSX60 and so a 30-week price channel is required.
There were only 6 trades issued from February 1990 to date and the model beat buy and hold by 608 points over the period. Below is a zoom over the last 5-years. Note at the close last week the upper channel printed 1486 and the lower channel printed 1309.