SmarTrend Weekly Performance Statistics
Last week’s decline in the equity markets, foreshadowed by a very toppy SmarTrend Uptrend Ratio, led to slight declines in the average return of our Uptrend universe from just over 47% to about 45%. As we stated here and in our Morning Call, stocks had reached a point where momentum had been stretched leaving fewer new Uptrending stocks to buy. Consequently, the percentage of stocks in an Uptrend ticked slightly lower from 83.3% to 83.1% - small but we will watch closely to see if it becomes a trend. Also, the percentage of Uptrends that are “in-the-money” also retreated from over 90% to just over 87%, still high but closer to our historical average. The percentage of winning Downtrend calls moved up from 40% to over 47% - an expected shift after a more than 2% decline in the S&P 500 last week. The next few weeks will be critical as we approach Q3 earnings season and with Friday’s employment report expected to be a potential catalyst. Please check our Morning Call each day for the latest insight on market direction and how it may impact the performance of both Uptrends and Downtrends. Remember, in downtrending markets, our Downtrend calls outperform. However, should the market find a base from which to rally, stocks that SmarTrend has in an Uptrend are to be watched for potential entry points.
I’ve been reading Morning Call every day — and applied your strategies to trading last week. Even with the down market, I made some money — and this week started off with a big jump. Thank you!
The weekly performance tracking looks good, but I’d be interested in seeing a charting of the annual performance. Has anyone there evaluated whether SmarTrend still performs as well when the daily trend indicators for the overall market direction are used for trading a time frame longer than one week? Are any annual performance charts available?
@David Rittenhouse
The time frame for trading is not necessarily only one week. We just update our stats weekly for everyone’s benefit. As you can see the average length for current trends is actually over 100 days due to the extended uptrend period of the overall market. Historically, this average around 30 days. In 2005, for example, the average Uptrend lasted 53 days with an average return of 11.47%.
In 2007, a more volatile time and the effective top of the last bull market, the average Uptrend was 37 days with an average return of 5.24%. In 2008 it was slightly less as Downtrends outperformed so Uptrends lasted only 30 days with a return of 3.5% - still respectable in light of how the market performed as a whole.
Through September of this year (including the dismal Q1), the average Uptrend lasted 40 days with an average return of just over 20%.