Fascinating chart via Jack Ablin of BMO:
I would modify Jack’s rule: In a bear market sell off, you want to buy for the trade in the 15-20% zone, not 5%.
I haven’t backtested the reverse, but I would guess thats true too — selling into a 20% pop over the 200 day moving average in Bull markets.
Playing a Sideways Market
BMO, October 31, 2008
U.S. Portfolio Strategy