A powerful INTERMEDIATE-TERM signal for bulls:
The standard Stock/Bond Ratio issued a “buy stock” signal on Friday. The last such buy signal was Sept ’10, prior to that was the buy signal in April ‘09. The Stock/Bond Ratio is widely followed by intermediate and long termers. My rule forces me to wait a bit for a confirmed MA cross, which helps me avoid whipsaws in a longer term account, but I don’t know anyone else who uses such a rule.
http://stockcharts.com/h-sc/ui?s=$SPX:$ ... =247548371
Then, JUST FOR FUN ONLY, compare the simple stick charts, showing the liftoff from the ’09 bottom, to today’s.
’09…
http://stockcharts.com/h-sc/ui?s=SPY&p= ... =244427973
Today
http://stockcharts.com/h-sc/ui?s=SPY&p= ... =244428126
2009 shows a month+ of backtesting the 200ma (the green-dotted line behind $SPX is $USD dollar).
The action at the 200ma is very important, as that MA (and the 50ma) are the most “famous” MAs in our industry. Crossing the 200ma hits all the news chanels when it occurs. And many folks (the thundering herd, if you will), make their portfolio-allocation decisions based on that MA, in conjunction with the Stock/Bond Ratio… Then, compare the action at the 200ma during last year’s correction:
http://stockcharts.com/h-sc/ui?s=SPY&p= ... =244468477