A Reliabe Indicator For Major Market Moves

One indicator that I watch rarely gives signals, but it is worth listening to when it does give a signal. It is the regular MACD applied to the monthly chart of the S&P 500. This indicator alone has called some major market turns. Also, I think that it works as a good filter for telling you when to be long and when to be short (or out of the market if you don't short).

As a rule of thumb, you should be long when the signal line (aqua blue line) is above the exponential moving average (gray line). This rule will keep you in the same direction as the long term trend, which is generally a good place to be. Here's the monthly chart from an excellent website, freestockcharts.com:Through experience, I have noticed that MACD crossover signals tend to be more reliable when they are sharply made and there is a wide margin between the lines just before and after the cross. That looks to be the case right now. Obviously this signal is not 100% because NOTHING is a sure thing...but this signal is worth keeping an eye on and it might give me the confindence to stick with my long positions when I am hearing all of the chatter about how the market is about to crash. The fact is that we are currently in an uptrend, and I believe in staying long until the trend is over. From the looks of the above chart, we've still got some room to move up in the S&P.

TLT