Time the Markets: Using Technical Analysis to Interpret Economic Data
by II Charles D. Kirkpatrick
7. Monetary Indicators
Monetary factors include interest rates, bond prices, spreads between interest rates, and credit. I test several of these monetary indicators to see if a moving average crossover system can be developed using their data for market timing. As always, with any method using market prices, a protective stop and trailing stop rule are applied from optimization of the in-sample data.
Rates
Interest rates are either short-term or long-term and high or low quality. I look at corporate Moody’s Baa rated interest rates to see if the riskier side on long-term interest rates can produce a viable system. Then I look at the least risky long-term rate, the U.S. ten-year bond rate. Finally, I look at the federal funds rate to see whether ...
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