GWM Equity Trend Tracking Model

The chart below illustrates a back-test of the GWM Equity Trend Tracking Model. You can see that it is quite effective.

The system is based on relative strength,

comparing the daily performance of the S&P 500 to a risk free

money market fund.

Signals are generated when stocks are either out-performing or under-performing the risk free money market rate of return. 

The red signal dictates that we sell the stock position and place the proceeds in the money market.

The Green signal dictates that we sell the money market fund and invest in the stock position (SPY).

The following graphic includes three charts:

Top = S&P price history

Middle = Relative Strength and signal Generator (small green & red dart shaped objects)

Bottom = Comparative cumulative results:

   Alternating red green line illustrates the results when buy/sell signals are applied.

   Solid red line illustrates the buy & hold results.

(Click on chart to enlarge it for easier viewing)

The system generates an occasional whipsaw. This is where a buy signal is generated quickly after a sell signal is given, resulting in a small loss. This should be viewed as the cost of insurance. We never really know when a small drop in the market may be the beginning of a major decline, such as the one we experienced in 2008.