I'm participating in live technical analysis project at a Morningstar forum (Portfolio design and analysis). My project data is at this link
. The summary chart shows you the particular challenge of using an indicator to sell and buy. It is relatively easy to sell a portion or all of an investment according to a moving average signal. Getting back in according to a pre-set signal is more difficult for Jill or Joe average investor.
The proponents of long term moving average signals to exit and re-enter usually describe the strategy as mitigation effort. You may partially exit and give up some upside, but when the big one comes you have preserved more of your investment.
I think I've read at least a hundred variations on the theme. For instance, some may exit a fund that has lost momentum, and move to fund(s) that show momentum. If you grab historical data and play out a strategy like this, it is tempting to apply such tactics to a portion of your portfolio. As for me, I continue to look and evaluate, and only used such tactics once, in the flash crash. I forgot to watch the signal closely, and did not get back in at the indicated time. That's the challenge of being a working stiff. I simply don't have time to implement all the alerts that would be necessary. I also have very little investing acumen.