Time the Markets: Using Technical Analysis to Interpret Economic Data

9. Putting It Together

Final Results

Using a filtered, moving average crossover system for each of a number of economic indicators, a final stock market timing model is now possible. I have selected those systems with large profits consistent with limited capital risk. The most profitable systems are not always the best because they often incur large drawdowns. The best systems are a compromise between profit and capital risk. Notice that volatility is not an issue. Risk is equated with potential drawdowns in capital, not the variability of return. You will also notice, however, that in the charts of the performance of the model, volatility is almost nil. This comes from selecting systems that have minimal capital risk rather than minimal volatility. ...