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Many stock market forecast strategies claim to beat
"Buy and Hold" Investing. The purpose of a back-test
is to see if they actually did outperform. If the strategy
has worked in the past, there is reason to believe that
it will work in the future. The question is...
how far
back should the system be back-tested?
One
year...five years... ten years? The answer is:
As far
back as is necessary to subject the system to
the types of markets that the system may
encounter in the future.
That is a LONG time !    
To really understand, you need a quick stock market
history lesson.

The stock market has Bull Markets (
), Bear Markets
(
), Super Bull markets, Super Bear Markets and also
Super Sideways markets (
). Super Bulls have lasted
20 years or more. The Bull market that began in the
early 80's and presumably ended in the year 2000
was one of the Super Bull Markets.
Look at the graph
to the right and you'll see a 19 year period and a 17
year period when the market traded in a lateral range.

These were Super Sideways markets.
Except for
dividends, investors made no money during
those 36 years.
The Ultimate Backtest
. . . SignalTrend's timing system nearly TRIPLED the annual price gains of the Dow in a 100 year backtest . . .  only 6 signals / decade . . .
. . .a  trading forecast for the DJIA, SP 500 or NASDAQ . . .  consistent Bull & Bear market profits !
$423,349
------------------------------------------------------------------------------------------
Dow Jones Industrial Average
(5% Per Year)
$1
SignalTrend's return reflects Long and Short trades placed at the DJIA
close, the day after each signal, excluding any variables other than the
Price of the index.
(Excludes taxes, dividends, commissions etc.)
Super Sideways Mkt
(17 Sideways Years)
19 Sideways Years
$163
------------------------------------------------------------------------------------
1900              1925              1950              1975              2000
13%
Annual Return
(SignalTrend)
Super Bull
Super
Bull
Super Bull
Super
Bear
/

Since 1900 we've had 3 Super Bulls, 2 Super Sideways and 1 Super Bear. Over 40 of those 104 years have been
Super Sideways or Super Bear markets.

Any stock market strategy should be tested over a period that includes at least one and preferably two of each of the Super trends
(Super Bull, Super Sideways and Super Bear).
If your strategy was only tested during the last 25 years (Super Bull
market), you may face disaster if the market transitions into a Super Sideways or Super Bear market.
That's why
SignalTrend back-tested its system over 104 years .
The Dow Jones Industrial Average was used because it is the only
index that has been in existence for that long.
It began in 1896.

Why aren't other strategies tested over as long a period as SignalTrend's? One reason could be that the data on which
the system is based didn't exist that far back. On the other hand,
it could be that such a rigorous test would prove that the
strategy doesn't work.
A Century of Super Bull, Super Bear and Super Sideways Markets
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