Candles & chart patterns · daily rule · Indexes & ETFs
Engulfing Switch on S&P 500 ETF
What the play says
Latest reading: Pattern 0.00
SPY with the play, last two years
Shading shows the play's call from the close that triggered it.
Engulfing patterns (+1 bullish, −1 bearish)
Dashed line at 0.
Growth of $10,000 since 2005
Log scale. After trading costs, with T-bill interest while out.
The record
The play against buying and holding SPY over exactly the same dates, after costs.
| Play, since 2005 | Hold, since 2005 | Play, 5 yrs | Hold, 5 yrs | |
|---|---|---|---|---|
| Annual return | +4.9% | +11.0% | +5.9% | +13.9% |
| Total return | +183% | +861% | +33% | +91% |
| Worst drawdown | −44.1% | −55.2% | −22.1% | −24.5% |
| Volatility | 13.6% | 18.9% | 13.7% | 17.1% |
| Sharpe ratio | 0.29 | 0.55 | 0.21 | 0.62 |
| Time invested | 39% | 100% | ||
| Switches per year | 4.1 | 0 |
Every call, graded
Right on 49 of 90 closed calls (54%). In calls averaged +2.1%; out calls saw SPY move +3.6% on average.
| Called | Call | Price | Until | SPY moved | Result |
|---|---|---|---|---|---|
| Jul 2, 2026 | OUT | $742.93 | now | +4.7% | open |
| Mar 9, 2026 | IN | $673.01 | Jul 2, 2026 | +10.4% | ✓ right |
| Dec 8, 2025 | OUT | $676.33 | Mar 9, 2026 | −0.5% | ✓ right |
| Aug 26, 2025 | IN | $636.51 | Dec 8, 2025 | +6.3% | ✓ right |
| Jul 15, 2025 | OUT | $613.80 | Aug 26, 2025 | +3.7% | ✕ wrong |
| Mar 5, 2025 | IN | $571.83 | Jul 15, 2025 | +7.3% | ✓ right |
| Feb 7, 2025 | OUT | $589.20 | Mar 5, 2025 | −2.9% | ✓ right |
| Dec 20, 2024 | IN | $579.76 | Feb 7, 2025 | +1.6% | ✓ right |
| Oct 12, 2023 | OUT | $418.22 | Dec 20, 2024 | +38.6% | ✕ wrong |
| Sep 28, 2023 | IN | $413.27 | Oct 12, 2023 | +1.2% | ✓ right |
| Jul 27, 2023 | OUT | $434.85 | Sep 28, 2023 | −5.0% | ✓ right |
| Jun 22, 2023 | IN | $419.49 | Jul 27, 2023 | +3.7% | ✓ right |
An in call is right when the price rose before the next call; an out call is right when it fell. The latest 12 of 91 calls shown.
How the play works
- Bullish engulfing: after a decline, a down day (close below open) is followed by an up day that opens at or below the prior close and closes at or above the prior open.
- Bearish engulfing: after a rise, an up day is followed by a down day that opens at or above the prior close and closes at or below the prior open.
- In at the close of a bullish engulfing day. Out at the close of a bearish engulfing day. Otherwise the rule keeps its last call.
A decline (or rise) means the prior close is below (or above) the close 5 sessions before it. Nison and Bulkowski require a prior trend but give no number.
Nison weighs support, resistance and confirmation, which a mechanical rule cannot judge. No confirmation day is required here.
Shadows are ignored, as both Nison and Bulkowski allow. One edge of the new body may equal the old body's edge, as in the TA-Lib pattern library, but not both.
Crypto trades around the clock, so a coin's daily open is just the prior close. For coins the open is taken as the prior close, and the pattern becomes a close beyond the prior day's open.
Where the rules come from
The case against
Valeriy Zakamulin tested moving-average timing on up to 155 years of U.S. stock data and found no statistically significant edge in the second half of that record. The rules earned their keep in a few severe bear markets and lagged buy and hold for long stretches in between.