How to implement the Free Investment Strategy

The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock market companies; the NYSE Euronext and the NASDAQ OMX.

After the Dow Jones Industrial Average, the S&P 500 is the most widely followed index of large-cap American stocks. It is considered a bellwether for the American economy, and is included in the Index of Leading Indicators. Some mutual funds, exchange traded funds, and other funds such as pension funds, are designed to track the performance of the S&P 500 index. Hundreds of billions of US dollars have been invested in this fashion.

An easy and cost effcient way to invest in the S&P 500 is an ETF that tracks this index, such as iShares S&P 500 Index (symbol: IVV). ETFs can be bought and sold just like stocks of individual companies.

In order to improve results, the model's SELL signal can be used to short stocks with an inverse ETF, such as ProShares Short S&P 500 index (symbol: SH). When you buy the SH, you profit when the market falls. This is why it is called an inverse ETF.

BUY / SELL / CASH signals

Rules for the signals are:

• BUY = close above 50 week MA and confirmation through MACD and RSI
• CASH = break of trendline or close below 50 week MA
• SELL = close below 50 week MA and confirmation through MACD and RSI
  

New signals for the strategy are issued on each Saturday morning. What happens then?

• BUY signal = buy IVV at open of markets on the Monday after the signal
  
• CASH signal for BUY = sell IVV at open of markets on the Monday after the signal
• SELL signal = buy SH at open of markets on the Monday after the signal
• CASH signal for SELL = sell SH at open of markets on the Monday after the signal

That's it! This is a very efficient and easy to implement strategy.

What kind of results can I expect using this strategy?