Our Market-Timing Strategy:

Our 'market-timing' is more accurately described as periodic asset-re-allocation.

The strategy covers three time periods; Long-Term, Intermediate-Term, and Short-Term.

Long-Term:

Our long-term signal is governed by our proprietary 'Long-Term Bull Market/Bear Market Indicator'. We have dubbed it the BBMI.

Very simply, it consists of a proprietary moving average (m.a.) on the S&P 500, utilized with a 10-trading day delay.

A buy signal is triggered when the S&P 500 has been declining and then reverses with enough upside momentum and internal strength to break up through the resistance at the m.a. A sell signal is triggered when a bull market has been underway, and the S&P 500 reverses to the downside with enough loss of strength to break beneath the previous support at the m.a.

The strategy incorporates a ten-trading day delay before acting on a signal, which is designed to eliminate those times when a break above or below the m.a. is a false signal or 'tease' that lasts only a few days before the major trend is re-confirmed. If the signal is still in place at the close on the 10th trading day, the trade is executed the following day.

While it may sound like a lot is lost by waiting 10 days until after the signal before executing, in fact not only does it avoid whipsaws, but often the market has pulled back some, so the entry price ten days later is close to when the signal was triggered.

 

 

The indicator is designed as a stand-alone long-term strategy. However, since the indicator was not developed until early 2014, we have not yet been able to use it as such in real time, but only as an indication that at the present time (early April) a bull market remains in place.

Its next signal will be for a bear market in which we will take downside positions in 'inverse' etf's designed to go up when the underlying index goes down.

The first table below shows its back-tested performance for the 20 years from 1995-2014, based on its buy signals being used to buy an index fund on the S&P 500, and its sell signals used to buy an 'inverse' etf on the S&P 500.

Note: In the table, the trade dates shown are based on the strategy's rule to wait 10 trading days after the moving average crosses the index to eliminate false signals or 'teases' that are not sustained, and then execute the change the following day (the 11th trading day). The Avg Price column is the average of the day's high and low intraday price that day. The 'dividends for period', are the total S&P 500 dividends paid during the period when in the market. The 'current level of S&P' is as of the close April 4, 2014.

 

Signal  Trade Date Avg Price Dividends for period Downside gain
or loss on sells
Total for signal  $100,000.
Buy 1-18-95  469.2         
Sell 9-14-98  1023.7  8.1% 44mths   +126.3% 226,300.
Buy  10-29-98  1076   - 5.0% - 5.0% 214,985.
Sell 10-20-00 1397 2.8% 24mths   +32.6% 285070.
Buy 5-12-03 938   +48.9% +48.9% 424,469.
Sell 1-15-08 1396 7.8% 55mths   +56.6% 664,719..
Buy 8-3-09 997   +28.6% +28.6% 854,829.
Sell 8-25-10 1049 2.6%   +7.8% 921,505.
Buy 9-24-10 1140   -8.0% -8.0% 847,784.
Sell 8-18-11 1160 1.9%   +2.1% 865,588.
Buy 1-18-12 1299   -10.0% -10.0% 757,071.
Current level of S&P 1865 4.5% 27mths   +48.1% 1,121,223
             

 

The strategy, including dividends, $100,000 into $1,121,223 during the period. The S&P 500, including dividends, turned $100,000 into $557,405. Note that the period included three bull markets and only two bear markets, significantly favoring buy an hold. (After the next bear market, when we can see three bull markets and three bear markets, the difference in performance is likely to be even more pronounced).

The following table is based on entering the market via an index etf on the S&P 500 on the buy signals and exiting to hold cash on the sell signals.

 

Signal  Trade Date Avg Price Dividends for period Interest on cash for period  Total for signal  $100,000.
Buy 1-18-95  469.2         
Sell 9-14-98  1023.7  8.1% 44mths   +126.3% 226,300.
Buy  10-29-98  1076   0    
Sell 10-20-00 1397 2.8% 24mths   +32.6% 300,073.
Buy 5-12-03 938   10.5% 30 mnths +10.5% 331,580.
Sell 1-15-08 1396 7.8% 55mths   +56.6% 519,255.
Buy 8-3-09 997   3.5% 19 mnths +3.5% 537,429.
Sell 8-25-10 1049 2.6%   +7.8% 579,348.
Buy 9-24-10 1140   0    
Sell 8-18-11 1160 1.9%   +2.1% 591,515.
Buy 1-18-12 1299   0    
Current level of S&P 1865 4.5% 27mths   +48.1% $876,033.
             

 

There is an additional importance in the strategy avoiding bear markets: Statistics show that most investors who hold through bear markets bail out at the lows. Devastated by their losses, and understandably fearful of the market, many then do not participate in the next bull market until it has been underway for one to three years. Therefore, not only losses experienced on the downside, but a considerable portion of the upside opportunity missed in the next bull market.

Intermediate-Term:

Unlike our long-term BBMI strategy and Seasonal Timing Strategy, our intermediate-term strategy is not based on mechanical fixed rule signals.

It is based on technical analysis and charting, with a goal of going after intermediate-term rallies and corrections of three to six-months duration in:

  • The U.S. market, utilizing index and sector etf's, including 'inverse' etf's in bear markets.

  • Global markets (individual country etf's).

  • Gold

  • U.S. Treasury bonds.

Our intermediate-term strategy can be on a buy or sell signal regardless of the season, and regardless of whether the BBMI strategy says the market is in a bull or bear market.

That is because there are intermediate-term corrections of 10% to 19% even during bull markets, as well as bear market rallies of 10% to 19% within ongoing bear markets.

The strategy utilizes technical analysis of charts, and some 35 technical indicators, to identify when the market has reached an overbought condition and overhead resistance, or an oversold condition and potential downside support. We then use momentum reversal indicators and money-flow indicators to tell us when the trend has probably begun to reverse for the intermediate-term.

Other tools used in the decisions to issue an intermediate-term buy or sell signal include investor sentiment, the activity of corporate insiders and institutional investors, short and intermediate-term seasonal factors, and forward looking analysis of economic conditions.

 You can get a better idea of how it works by checking out the sample issue of our newsletter by clicking here. Sample issue of Street Smart Report newsletter.

The strategy can have as many as 30 or 40 recommended buys or sells a year, in various percentages, in stock markets, U.S. or global, in gold bullion and gold stocks, long-side or short sales, and in bonds, and with several alternative holdings at each signal, the decision left up to each subscriber based on their risk tolerance, financial, and age considerations.

So, unfortunately, unlike our Seasonal Timing Strategy, and Long-Term BBMI strategy, we do not have a detailed record of its performance over the years compared to buy and hold.

We can say that we know it outperforms our Seasonal Timing Strategy in some years, but not over the long-term (but we know of no one and no strategy that does beat our STS over the long-term).

And we know this intermediate-term strategy did not perform well in 2012 and 2013, primarily because the market was not reacting to normal economic and market influences, but to the interference of the Federal Reserve and its massive QE stimulus programs, which they rushed in each time the market threatened to roll over into a normal intermediate-term correction.

 However, as an indication of its performance, our intermediate-term market-timing strategy has had us consistently ranked in the Top 10 Market Timers in the U.S. by Timer Digest for almost 25 years.

  Sy Harding:
(Numerous occasions left out of list for space-saving reasons).

1990: # 2 Stock Market Timer in the U.S.
1991: # 2 Long Term Market Timer in U.S.
1991: # 1 Gold Timer (Gold Timer of the Year).
1992: # 1 Gold Timer last 2 Year Period.
1992: # 1 Stock Market Timer last 3 Year Period.
1992: # 3 Stock Market Timer last 4 Year Period.
1993: # 1 Gold Market Timer last 3 Year Period.
1993: # 2 Long Term Stock Market Timer 3 Yr. Period.
1993: # 5 Stock Market Timer last 4 Year Period.
1994: # 5 Gold Timer last 12 months. May, 1994
1995, 1996, 1997: Did not publish, so was not tracked.
1998: #10 Stock Market Timer in U.S.
1999: # 2 Bond Timer last 12 months. July, 1999
1999: # 4 Gold Timer last 12 months Sept., 1999
1999: # 3 Stock Market Timer last 6 months Nov., 1999
2000: # 3 Stock Market Timer last six months Jan., 2000
2001: # 4 Stock market Timer last 6 months August, 2001
2001: # 3 Bond Timer last 12 months. August, 2001
2002: # 1 Stock Market Timer last 12 months. April 8, 2002
2002: # 3 Stock Market Timer last 12 months, July, 2002.
2003: # 1 Gold Timer last 12 months. September, 2003
2003: # 4 Stock Market Timer last 3 months. August, 2003
2004: # 2 Gold Timer last 12 months. February, 2004
2004: # 9 Stock Market Timer last 3 months, May, 2004
2004: # 2 Bond Timer last 12 months, May, 2004
2005: #2 Gold Timer last 12 months Nov. 2005
2006: #5 Bond Timer last 12 months Dec., 2006
2008: #4 Stock Market Timer last six months. August, 2008.

2009: #9 Stock Market Timer 12 months. April, 2009.

2010: #1 Gold Timer 12 months. October, 2010.

2011: #3 Stock Market Timer 3 months. June, 2011.

2011: #2 Bond Timer 12 months. July, 2011.

2012: #2 Long-Term Stock Market Timer of the Year.

2012: #1 Gold Timer (Gold Timer of the Year).

2013: #1 Long-Term Stock Market Timer last 12 months. April.

2013 #3 Gold Timer of the Year.

 

Short-Term:

We provide short-term timing information and signals only to give subscribers a heads-up of what to expect short-term so they won't be surprised and caught off guard, perhaps panicked in or out of the market, by unexpected short-term moves.

 A recent example:

 

 But we are not short-term traders and make no recommendations on our short-term signals in either direction.

A few of our significant calls:

  • Book: Authored Riding the Bear - How to Prosper in the Coming Bear Market! Released March, 1999, predicting the worst bear market since 1929-32 was just around the corner. The Dow topped out just 9 months later on January 14, 2000.

  • Called the Nasdaq top and advised selling it short in early March 2000 as it passed 5,000, predicting it was about to plunge 35% to 3,300. (Confirmed by an article in Barron's March 6, 2000 issue). The Nasdaq topped out just four days later, on March 10, ending its great 1990s bull market, with an even larger plunge than forecast, 78%.

  • Gave a buy signal for a "significant bear market rally" April 2, 2001! The market bottomed just two days later, on April 4. Eight weeks later the S&P 500 was up 19%, the Nasdaq up 41%.

  • Took the profits from that rally in June, 2001, and with a sell signal on July 6, 2001, moved subscribers to 100% positioning for the downside with short-sales, etc., in anticipation of a resumption of the bear market.

  • Then after the terrorist attacks, took the profits from the downside on September 20 and 21 (2001), which were the exact two days of the market's September bottom.

  • Then in spite of the terrorist attacks that had everyone spooked, gave a buy signal on October 3, 2001 for another significant rally. The Nasdaq was up 44%, and the S&P 500 up 23% just two months later.

  • Then gave a sell signal on April 24, 2002, which was followed by six straight months down to the October, 2002 final bottom of the bear market.

  • Then gave a buy signal on October 17, 2002, calling for a substantial rally, which would "likely be the beginning of the next bull market". Which it was.

  • Developed the Seasonal Timing Strategy© in 1998, which has doubled the market over the long-term since. Further it did so with 50% of market risk and just two trades a year. For more information on how and why it works Click here.

  • Book: Authored the 2007 book Beat the Market the Easy Way - Seasonal Timing Strategies That Double the Market! which explains several short-term, intermediate-term, and long-term seasonal strategies, and provides important information on secular bull markets and secular bear markets, and why in 2007 another bull market top was probably near.

  • Called the early March, 2008 bottom of the first leg down of the 2007-2008 bear market, making profits from the subsequent bear market rally off that March low.

  • Then called the top of that rally almost to the day in May, 2008, took our profits from that rally, and repositioned for the downside.

  • For 2008 our Market-Timing Strategy portfolio was up 9.2% for the year, in that terrible bear market year in which the S&P 500 lost 38.5% of its value, the Dow lost 33.8% of its value, the Nasdaq lost 40.5% of its value, and even 'best investor in the world' Warren Buffett was down 31.8%. It put us on the Hulbert Financial Digest's Top-Ten Newsletters of the Year list. 

  • Then called the bottom of the severe 2007-2009 bear market within a few days of the March 9, 2009 bottom. In fact, while not issuing an official buy signal until March 16, we actually recommended that subscribers move our then 70% cash position to 70% invested on March 10 because the market was so oversold.

  • As noted we struggled in 2012 and 2013, as we were reluctant to be aggressively invested on concerns the market was only being held up artificially by the Fed's easy money policies.

Our goal is not only to help you make profits from bull markets, but just as important to avoid losses in bear markets and serious corrections. You'll never buy low and sell high listening to brokerage firm and mutual fund spokesmen, and the media that kowtows to them!

Let our research and market timing help you continue to make gains, but also protect your assets from the periodic losses that buy & hold investors are guaranteed to suffer.

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Recommendations are based on our best judgment and opinions but no warranty is given or implied as to their reliability. It is each reader's responsibility to decide which, if any, of our opinions or recommendations are suitable for their own individual situation, and in what manner to use the information. Past performance does not guarantee future performance or prevent losses.


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