The most well known 'mechanical' system in the world of technical analysis is still in buy mode since December of 2011. The Dow theory, formulated from a series of Wall Street Journal editorials authored by Charles H. Dow, is the grandaddy of all technical market studies.
Although it is frequently criticized for being "too late", it is known by name to nearly everyone who has had any association with the stock market, and respected by most. The track record is certainly impressive, and continue to provide its user an advantage over the unaware Buy-and-Hold investor.
According to "Technical Analysis of Stock Trends, Ninth Edition / Edwards & Magee" an investment of 100$ following the theory recommendations from 1897 would have grown $345'781.94 by December 21,2005 just from the long side. By contrast, the investment of $100, if bought at the low, 29.64, and sold at the historic high, 11762.71, in January 2000 would have grown to $39,685.03.
I always like to know what the Dow theory say about the current market environnement as I think it is the best major technical trend indicator at the US equities trader disposal. Below is the current record of the major trend (click to enlarge):
Dow theory not only provide buy and sell signals, it also advise on the current stage of the Bull or Bear market. Of the 3 stages presented by the theory, my guess is that we stand in the second phase, approaching the dangerous third face where the "public" enter the scene and where the financial news is extremely good. But we are not there yet!
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