The market is always right, it doesn't care what we think or what we want. It is going to do what it is going to do regardless of why. If you listen, it will tell you what to do.

 

Knowing what the current trends are will generate your BUY and SELL signals.

 

I was taught by Dick Fabian that it is best to use two benchmark indicators to confirm your buy and sell signals. Dick had developed his own benchmark indicator called the Fabian Indicator Composite (FIC) that he used as a confirmation of the Wilshire 5000. Both of his benchmark indicators needed to move above or below the trend to generate a signal.

 

I use two benchmark indicators as well. I have built my own domestic composite and use it as confirmation of the Wilshire 5000. It is comprised of:

 

Wilshire 5000 (stockcharts symbol: $WLSH)

 

Dow 30 (stockcharts symbol: $INDU)

 

NASDAQ 100 (stockcharts symbol: $NDX)

 

S&P500 (stockcharts symbol: $SPX)

 

Russell 2000 (stockcharts symbol: $RUT)

 

I would suggest using the Wilshire 5000 (stockcharts symbol: $WLSH) as one of your benchmark indicators. You can use it as your only benchmark indicator if you wish.

 

If you choose to use a second, confirming benchmark indicator, you can create your own or try:

 

DJ US Broad Market (stockcharts symbol: $DJUS)

 

S&P1500 (stockcharts symbol: $SPSUPX)

 

For the general trend of the international market, I use the

MSCI EAFE index (stockcharts symbol: $IEE). I have built my own international composite and use it as a confirmation of the MSCI EAFE.

 

The default moving average shown on the chart is the 40WMA (week moving average). You can change the moving averages to whatever you want. The 40WMA is not magical, its just the one I use. For trend following the longer the moving average you use to generate your BUY & SELL signals the less trading you will do.

 

On the chart you will see the moving average shown as a smoother blue line across the chart. In the upper left corner of the chart you will see the actual calculated value for the moving average, shown as MA(40) in blue.

 

If you change the time frame on the chart to say 3 years, you can see when you would have made your trades.