Thread by @saxena_puru

Recently, a few people on here have attacked me because I don't follow patterns/technical analysis and they've called me a "dweep, strange and a non-believer"!

Well, what better way than to objectively test some of the most popular technical indicators via actual backtests?...

So, this is exactly what I've done today - backtested a bunch of commonly used technical indicators on $SPX with data going back 30 years and compared each strategy's performance to 'Buy&Hold'...

The results are here (with the screenshots of backtests), you can be the judge...

1) MACD crossover strategy vs. Buy&Hold -

$100K is now worth $188K in MACD strategy (2.12%CAGR)
$100K is now worth $941K in Buy&Hold (7.76%CAGR)

2) Stochastic crossover strategy vs. Buy&Hold -

$100K is now worth $151K in Stochastic crossover strategy (1.38%CAGR)
$100K is now worth $941K in Buy&Hold (7.76%CAGR)

3) RSI strategy (buy when RSI goes above oversold, sell when it goes below overbought) vs. Buy&Hold -

$100k is now worth $175K in RSI strategy (1.89%CAGR)
$100K is now worth $941K in Buy&Hold (7.76%CAGR)

4) CMO strategy (buy when CMO goes above oversold, sell when it goes below overbought) vs. Buy&Hold -

$100K is now worth $187K in CMO strategy (2.1%CAGR)
$100K is now worth $941K in Buy&Hold (7.76%CAGR)

5) Bollinger bands breakout strategy (buy when price breaks out above the upper bollinger band, sell when price dips below the upper bollinger band) vs. Buy&Hold -

$100K is now worth $111K in Bollinger bands strategy (0.34%CAGR)
$100K is now worth $941K in Buy&Hold (7.76%CAGR)

6) 200day SMA strategy (buy when price breaks above 200day sma, sell when price closes below 200day sma) vs. Buy&Hold -

$100K is now worth $531K in 200-day sma strategy (5.73%CAGR)
$100K is now worth $941K in Buy&Hold (7.76%CAGR)

7) 100day SMA strategy (buy when price breaks above 100day sma, sell when price closes below 100day sma) vs. Buy&Hold -

$100K is now worth $262K in 100 day SMA strategy (3.26%CAGR)
$100K is now worth $941K in Buy&Hold (7.76%CAGR)

8) 50day SMA strategy (buy when price breaks above 50day sma, sell when price closes below 50day sma) vs. Buy&Hold -

$100K is now worth $220K in 50day SMA strategy (2.67%CAGR)
$100K is now worth $941K in Buy&Hold (7.76%CAGR)

I'm not saying that all technical traders lag the markets; some traders are very good and they beat the markets over time. However, hard data presented here confirms that classical technical analysis + indicators have significantly lagged $SPX over the past 30 years.

Finally, I haven't cherry picked the start date of my backtest. If one had invested in $SPX on 1 Mar '00 or 1 Oct '07 (two of the worst possible times to invest in decades) and simply held on, the investment today would have outperformed ALL indicators posted in this thread!