This chart shows the proprietary CrystalBull Macroeconomic Indicator in relation to the S&P 500, and is updated monthly. In our opinion, this is our best indicator for the longer term stock market trend. This algorithm looks for decaying macroeconomic strength, to warn investors of possible stock market weakness ahead. This market timing model is for long-term investors, who seek to avoid secular bear markets. Since 1970, following this indicator (in market when above zero, out of market when below) would have beaten a Buy-and-Hold strategy by 647.93%.
HOW TO USE: The gold line in the bottom chart represents the CrystalBull Macro Indicator. It is calculated at the end of each month, based on the currently available economic data. Values above zero indicate an expected positive stock market trend going forward, and values below zero indicate a possible negative trend going forward. Click the "log/lin" link at the top-left of the S&P500 chart to see the chart at logarithmic scale. A straight line, in a log scale chart represents consistent exponential growth. Isn't that beautiful? That's exactly what we hope to find. This backtested model captured most of the stock market gains, but avoided the bear markets. Thus, its exponential growth rate is much higher than the buy and hold returns.
( HINT: Click-and-drag left-to-right on a chart to zoom in to a specific date range. Double-click on a chart to zoom back out. )