In forming MARCON, I was also interested in how the 3 pairs of criteria would have reacted from the late 1990s to the early part of 2004. The era was the 'tech boom', with the sp'500 rising from the low 500s in 1995, to the 1500s in 2000, only to be cut in half, to the high 700s in mid 2002.
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Lets have a look at the 1998-2004
period, and see how MARCON would have been labelled, in each of the
monthly, weekly, and daily cycles.
Monthly cycle
Weekly cycle
Daily cycle
Key issues
-the monthly cycles held largely
bullish until May 2001, at which point MARCON was then able to
reflect short/mid term trading signals.
-MARCON'1 was hit a considerable number
of times, with three distinct periods. one period of MARCON 2/1,
lasting from April-July 2002.
-MARCON'1 was briefly hit in late
Jan'03, through to mid Feb, at which point the weekly charts turned
positive.
-the bounces largely held under the
monthly10MA until the recovery began in Mar'2003.
-the bigger monthly cycle took over
again in May 2003, with MARCON 6.
-it was not until Jan'2004 that the
market fully recovered to MARCON 7.
Summary
It should be clear from the 3 charts
that MARCON does not capture the initial warning signs of a major
bear market wave. However, once the monthly criteria go negative,
that turn/signal can be a powerful sign.
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