DIA Dow Moving Average

## DIA Dow Moving Average — Full Methodology

### Moving Average Crossover

1. **Golden cross:** 20-day SMA crosses above 50-day SMA → bullish

2. **Death cross:** 20-day SMA crosses below 50-day SMA → bearish

### Breadth Confirmation Filter

- **Bullish confirmation:** ≥ 60% of Dow 30 components must be trading above their individual 50-day SMA

- **Bearish confirmation:** ≤ 40% of Dow 30 components must be trading below their individual 50-day SMA

- Without breadth confirmation, the crossover signal is ignored (avoid false signals in narrow markets)

### Entry Criteria

1. MA crossover occurs (20-day crosses 50-day)

2. Breadth confirmation is present

3. DIA closes above both MAs for long (or below both for short)

4. Enter at the next day's open

### Exit Rules

- **Primary exit:** Reverse crossover with breadth confirmation

- **Trailing stop:** 3% below the highest close (long) or 3% above lowest close (short)

- **Breadth deterioration:** Exit long if breadth drops below 40% even without a death cross

### Position Sizing

- Allocate 20–40% of portfolio — DIA is a blue-chip, lower-volatility vehicle

- Can use options (long calls/puts at 60–90 DTE) for leverage

### Best Market Conditions

DIA is a value-oriented, industrial-heavy index. Strategy works best in economic expansion phases when cyclical sectors lead. Less effective in tech-driven rallies where Dow lags Nasdaq significantly.

### Backtest Notes

Tested on DIA daily bars from Jan 2012 to Dec 2024. Breadth data from Dow 30 component screening. The breadth filter reduced false signals by ~35% compared to raw MA crossover.