FINAXIONResearch
Finaxion Research · Stochastic: oversold cross (14, 3) · indices and ETFs · Recomputed 2026-09-10

Does Stochastic: oversold cross (14, 3) work on SPY?

Stochastic: oversold cross (14, 3) does not beat buy-and-hold on SPY: -7.8 points a year over 34 years.

Total return
176.6%
Buy and hold
×32
CAGR
3.1%
Sharpe
0.00
Max drawdown
-45.1%
Trades
423
Out of sample
overfit
Years
34
1×10×19941997200020032006200920122015201820212024
StrategySPY

Findings

  1. Stochastic: oversold cross (14, 3) does not beat buy-and-hold on SPY: -7.8 points a year over 34 years.
  2. Against the S&P 500 over the same window: -7.8 points a year.
  3. Total return +176.6% versus ×32 for buy-and-hold, with 423 trades.
  4. The result does not hold out of sample: it is overfit.
  5. Maximum drawdown -45.1%.
  6. It beats in neither half of the history (split at 2009).
  7. It ranks #147 of 235 markets for this strategy by annual excess over the S&P 500.

Findings derived from the full panel. Each carries its number and its denominator; the computations are reproducible with artifact f4bff284709b.

Exactly what was tested

%K(14) crosses above %D(3) in the oversold zone → entry. Held until %K exceeds 80 → exit.

How to read it

The verdict compares the strategy with buying and holding SPY over the same window, with round-trip costs per asset class. “Out of sample” is walk-forward: the rule is fit on one stretch and judged on the next. A result that beats in the full sample but not out of it is overfit. Full methodology in the protocol. How we test.

Open this backtest with its trades   Trades (CSV)

Every strategy on SPY → · Full page for Stochastic: oversold cross (14, 3) →

How to cite

Finaxion Research (2026). Does Stochastic: oversold cross (14, 3) work on SPY?. Daily backtest 1962-01-01–2026-08-31, artifact f4bff284709b. https://finaxion.app/en/research/stochastic-oscillator/spy

Not a recommendation. Past performance does not guarantee future results.