Google Trends: Composite Sentiment Index system

This system uses Google Trends for buy/sell signals. For background and theory, see original magazine article: Google Trend Sentiment Systems.

System rules

1. Buy at stop next bar at the 5-week highest high price if Google Trends filter is bullish (trend entry).

2. Buy at market next bar if the Low price has been declining for 6 weekly bars in a row or more if Google Trends filter is bearish (counter-trend entry).

3. Sell trend position at stop next bar at the 5-week lowest low price if Google Trends filter is bullish.

4. Sell counter-trend position at market next nar if the High price has been rising for 3 weekly bars in a row or more and Google Trends filter is bearish.

Google Trend filter composition rules

This equal-weighted index is built of four “bearish” search keywords: “Roubini”, “stock market crash”, “recession” and “unemployment”. It is considered valid when its value is greater than 0.

• Index is bullish: composite Google Trend rank value for the current week falls below 1.0 (indicating low interest to the bearish keywords)

• Index is bearish: composite Google Trend rank value for the current week is at or above 1.0 (indicating increasing interest to the bearish keywords) plus the rank is above its own 10-week simple moving average.