From my tests, the SPY on a interday basis is mean reverting. There are many ways to capture this and perhaps the above method is not the best. You can capture the mean reverting theme of the S&P500 using simple linear models.

For example:

1. Test a rolling z-score on daily bars, optimize for various look backs and entry / exit thresholds
2. Simple MACD or RSI overbought indicators.

I think you will find that those simple linear models will out perform the above.