Does your bottom detector trigger independently of the 99-day signal?
Yes, totally independent signals because they look at different time frames.
Remember that the 99 day rule is just a particular tuning of the general observation:
The longer it has been since a fresh recent high, statistically the lower the forward return in the next couple/few months.
It’s a gradual roll-off, not a bright line thing.
An old post with some figures.
https://discussion.fool.com/a-new-sampp-high-so-the-99-day-indic…
That table is worth pondering.
Those are 6-month forward average returns, a little bit longer time frame than is generally used for timing signals.
But still, you can see the gradual roll-off with the time since high.
So there is no specific cutoff that is magical. It’s a “broad sweep of history” view of the markets: short delay good, longer delay bad.
It’s attempting to answer the question: “Is there some evidence that you are still in an ongoing bull market?”
Longer time frames are bad, so you have to pick a useful cutoff. The 99 day level was my chosen compromise.
A person who’s bullish by nature might pick three months. A very conservative investor might pick six months.
This helps explain why you can have a bottom detector when things are bullish in that view, or when they’re not.
The bottom detector is a much more short term “pick a particularly good day to buy” thing.
My short term bottom indicator is a reasonably good omen for 1-4 weeks.
That might happen in a bull or in a bear.
By contrast:
The major bottom indicator, if I’m being braggardly, is much more solid: when that happens, just go buy something, dang it.
Last signal dates were this cluster:
2020-03-17 (borderline)
2020-03-18 (borderline)
2020-03-19 (borderline)
2020-03-23
Average S&P close on those four days: 2426, average one year no-div nominal index return: 34%.
Last signal before that was this cluster:
2018-12-20 (borderline)
2018-12-21
2018-12-24
2018-12-26
Average S&P close on those four days: 2393, average one year no-div nominal index return: 63.5%.
So, the 99 day signal is the climate. Is it still summer?
The short term bottom detector is today’s weather forecast. Is it likely to be sunny in the next week? (up to a month)
The major bottom detector is: is today likely to have been about the coldest day we’ll see in the next 6-18 months?
Jim