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| Here you will find my market timing model. This is used to track the health of the overall market. It it a lot easier to make money in a healthy market than it is to make money in an unhealthy one. You should just sit on the sidelines when the indicators tell you to. The top chart of each section is just a view of the New York Stock Exchange index with a 50 day moving average line on it. The 2nd section is my main market health indicator (PRI). The third section is my main secondary indicator (SEC1) and the bottom section is my last secondary indicator. (SEC2). SEC1 and SEC2 are simply the MACD of 2 relative price ratios that are proprietary to my trading system. To my knowledge you will not find this indicator anywhere else. When the main indicator is above zero it is generally OK to be buying stocks and the quicker you can get into the market after the line crosses zero the less risk you have. The longer you wait the more risk you are taking on. Likewise, a cross below zero means GET OUT. You also want to look for divergence between the PRI indicator and the market itself. If the market is making a new high but PRI is not then trouble MAY be ahead. One other item must be true. The market must be above the 200 day MA line. If it is not, then we are in a BEAR market and you should only be thinking about going short or trading the bear market rallies on a short term basis. By using the two secondary indicators SEC1 and SEC2 you can confirm what the main indicator is telling you and can often get out or in before the PRI indicator gives the confirmed buy or sell signal. To use the SEC1 and SEC2 indicators you want to look for them to cross above or below the zero line only. A BUY signal is given when both SEC1 and SEC2 have gone BELOW the zero line. A SELL signal is just the opposite. You can also use SEC1 and SEC2 crossings of the signal line to time short term buy and sell signals. I've put the charts below starting with 2003 at the bottom. Follow along with the notes on each chart to learn more about how this system works. This chart is updated weekly along with my model portfolio (Click here to see) Bookmark this page and visit weekly to check the market health and read my blog comments. |
| 2008 Current Long Term Signal- SELL Current Short Term Signal- BUY Please see my BLOG for weekly comments on this timing chart. Click Here to see how my model portfolio is doing Last Update 11-30-08 |
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2007 The first part of 2007 was great. It continued the rally that started in August of 2006 and carried all the way through to late July. Almost 1 solid year of steady upward climbing without a major pullback. The only bump was in late February and it was short lived, but it was the early warning indicator of what was to come later in the year. Let's get started. 1. The drop in the market in late February came hard and fast. It was not on the radar screen at all. the only thing I want you to notice is that both SEC1 and SEC2 did start to diverge before the top was made. Whether you would have paid any attention to it or not is another story, but it was telling you something. 2. SEC2 crosses in late Feb and SEC1 in early March. Much to late to do much of any good, as the market rallied from that point forward. No indicator is perfect! 3. SEC1 gives the OK signal in mid March and SEC2 about a week later. The market continues it's upward climb like nothing had happened. 4. May through July as the market makes new highs the PRI indicator is failing to do the same. DIVERGENCE...look out! Tighten your stops and start taking profits. 5. Late July and all three indicators cross the zero line within 1 week of each other. This is a SELL signal. 6. As mentioned in the 2006 charts I have been playing around with the idea of using the MACD crosses of SEC1 and SEC2 for buy and sell signals when I want to be aggressive. If I would have done so here you can see I would have picked the bottom of the decline quite nicely. 7. SEC1 and SEC2 cross within a few days of each other in mid September giving the BUY signal. 8. PRI gives the confirmed BUY about 1 week later. 9. If I was entered aggressively back at point 6 I could have just as easily exited at point 9 when both SEC1 and SEC2 MACD crossed. I would have gotten out right at the very top. 10. Late October and SEC1 crosses followed by SEC 2 and PRI the first week of November. We are out again. |
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2006 2006 was a very nice year for the stock market. With only one major decline that was easily navigated using my market timing indicators. Let's get into it. 1. The market was steaming higher since mid November of 2005 and as you can see the PRI had been doing the same but in early March when the market was coming back up to its old high the PRI indicator was making a lower high. Then as the market continued higher PRI continued lower. If you'll notice the SEC1 indicator even breaks above zero briefly in early March warning you of the coming decline. No need to get out yet, but you can start to tighten your stops. 2. Then if you notice in late April SEC1 MACD crosses the signal line. Could we possibly use this as an early warning? 3. Then about half way through May all three indicators cross the zero line and give the official SELL signal. 4. The more I use this timing indicator the more I find myself playing around with possible ideas. Aggressive traders could use the MACD crossing of the signal line on SEC1 and SEC2 to get into and out of the market many more times. For instance, about the 3rd week of June when they both crossed the signal line would have signaled you to BUY. You would have been able to get back in almost at the very bottom of the decline. Not bad! 5. Late July PRI goes positive and gives a confirmed BUY signal. It is safe to go long here but I like to wait for SEC1 and SEC2 to tell me it is OK as well. 6. SEC1 gives the OK in late September and SEC2 does in early October. If you notice the market had not moved to much and was quite choppy from when the PRI signal gave the BUY in late July until the two SEC indicators gave their BUYs in early October. Once you got the OK from the two SEC indicators the market began to move smoothly and quickly higher. |
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2005 2005 was kind of choppy. It ended the year higher than it started but only on short pockets of strength. Using my timing indicator you would have known when the best time to get in was and when to start taking profits. Let's take a look. 1. In early January SEC1 goes above zero. SEC2 followed about 1 week later giving the official SELL signal despite the fact that PRI was still well above the zero line. 2. Then in early Feb. both SEC1 and SEC2 cross back below zero and give another BUY signal and the market moves to new highs in early March. 3. As the market is making new highs the PRI indicator is not and is in fact declining. This is giving us the divergence we are always looking for as a warning that something bigger is just around the corner. 4. The market begins to drop and PRI crosses below zero giving the official SELL signal. 5. A few days after PRI gives the official SELL signal both SEC1 and SEC2 give their SELL signals. This is one of the few times that SEC1 and SEC2 were actually behind PRI. 6. Mid May and PRI gives the official BUY signal 7. First part of June and SEC1 crosses below zero and then a week or so later SEC2 crosses below zero. Notice that the market did not do much until after both were below zero even though PRI had crossed above zero almost 1 month before SEC2 did. 8. As the market steams higher through September we notice that PRI is diverging again. If you take a look at SEC2 in late August you would have seen that it poked above the zero line telling you that something was not right. 9. Then in the first part of October all three indicators crossed their signal lines almost at the same time. This was a big SELL signal. 10. SEC2 goes back to a buy in early November and SEC1 crosses in mid November making it an official BUY signal. 11. The last week of November PRI gives the confirmed BUY signal. Notice the nice bounce higher in the market you would have missed out on if you had waited on the confirmed BUY. |
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2004 OK....the first part of 2004 was kind of rocky and this will be a good way to get an inside look at how my market timing indicator can help you make it safely through these rough patches. 1. As you can see in early 2004 the stock exchange was making new highs but my PRI indicator was going down. This is the divergence that we look for that warns us of coming trouble. 2. My proprietary SEC1 indicator crosses above zero the first week of Feb. 1 full month before the top occurs in the actual market. When SEC1 gives the signal you can go ahead and start tightening stops or taking profits. Take notice that SEC2 does not cross the zero line until early in March when the market starts to break below the 50 day MA. When both SEC1 and SEC2 are above zero you have a confirmed SELL signal regardless of what PRI is telling you. 3. PRI gives the official sell signal in mid April 2004. Notice that the market had rallied back above the 50 day MA briefly after it's initial drop. 4. PRI gives the official BUY signal the first week of June 2004 5. If you notice SEC2 had crossed back below zero way back in early April but then popped back above zero in May and then dropped back below a couple of weeks later. SEC1 dropped below zero in mid June about 1-2 weeks after PRI gave the official BUY signal. I like to wait for SEC1 and SEC2 to give me the BUY signal before I actually BUY. 6. Then after you bought back in mid June there was a nasty drop back to the old lows in May. Probably would have scared a few people, but if you were using my indicator you would have known that this was just another great buying opportunity. Notice SEC2 popped up above zero for quite awhile but SEC1 never did. With PRI above zero and SEC1 below zero you had a strong BUY signal. |
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1. Early 2003 PRI is still on a BUY signal but SEC1 and SEC2 both move above the zero line giving a sell signal. NYA was just breaking below the 50 day MA. 2. PRI gives confirmed sell signal 3. PRI is still on a confirmed sell mode but PRI crosses below zero which tells us to get ready to start buying. A few weeks later SEC2 crosses below zero giving the OK to start buying. 4. About 1 week later the PRI indicator gives the confirmed BUY signal 5. We see some divergence between the Stock Market and the PRI indicator, but looking at SEC1 and SEC2 they are both below zero. Each one of them goes above zero for a brief period of time but not at the same time so no sell signals are generated. SUMMARY- A BUY signal is given in March of 2003 and no sell signals are given for the remainder of the year. SPY gains about 27% from March through December. |
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