Referring to your MTR Timing Indicator, a nice additional feature would be to update the profits had an indiviual follow this indicator.  I would like to follow how successful or unsuccessful this indicator performs.

Bruce Thompson

mckoan@comcast.com

Hi Bruce,

I do think that you make a great suggestion. The performance can be monitored going LONG or SHORT SPY or QQQQ, since the model is based on the VLAI and there are only futures available to trade that index. So it is out of the hands of most investors

In the reference section of the site we posted the back-tested returns of the model which from 1998-2008 was a risk adjusted return of 523%.  This was with 5% stop and trailing stop loss orders.   There was no entry back into a position after being stopped out so the returns could be higher.

Tracking the performance would make a great addition to the site and would help to track the model based on an ETF that tracks major indexes. It would also help to refine some re-entry points after being stopped out.

Your suggestion will get on our to-do list. I will consider the best way to implement this feature and maybe use several ETFs to track the performance, this way it would provide more options as to what indexed based ETFs performed the best according the MTR-TM.

Thanks again for the great suggestion.

Regards,
Patrick

Hi Leslie,

I appreciate your email.

After the bug was fixed in the data I created a blog post regarding the update, and updated the documentation on the model. I should have sent a global email.

I will provide the details but for reference I am posting links to the blog post and the updated reference.

Blog Post: Stock Market Timing Model - Update

Reference Section: Market Timing Model - Read Section II and III 

Taking Long or Short Positions

1. Buy or Short:  The Reference Section discusses using a MidCap 400 ETF for a simple ETF strategy.  A MidCap 400 ETF more closely mimics the Value Line Index. The only other alternative to match the performance would be to buy Futures Contracts or Options on the Value Line index at Kansas City Board of Trade.

2. When To Buy Or Short:  All the calculations for the model (posted in the reference section) were done at the next day opening price.

Lets say the model gave a market up call.  Buy next day at the opening BUT always use a limit order. Trading market orders is dangerous, plus most brokers charge the same for market or limit orders. I use Interactive Brokers and pay $1.00 per trade.  Also I ran tests for buying the next day only if the price trades above the high (for LONG) of the prior day. This would indicate that the market is moving in the direction of the signal.  This results were not good so next day at the open with a limit order is the way to go. 

Overall the MTR-TM as the 4% Model is supposed to be used to time the overall market. It can be used in this manner (to buy stocks), but just as we have seen this past week the DOW, S&P 500, and NASDAQ do not all perform the same over the short term so for an ETF strategy a MidCap 400 ETF must be used.

I want to make one final note about market timing. Leslie Masonson, the author of "All About Market Timing"  reviewed many marketing strategies in his book. The 4% Model, a 4% Daily Model, a 6% NASDAQ model and others. One very important piece of advice he gave was this "No matter what system you use trade each signal." He said this because, as we have seen with the MTR-TM sometimes a signal maybe very short in duration, some longer. So when the signal fires, trade, and use stops.

Leslie please let me know if more clarification is required.

Thank you,
Patrick

 I was wandering--why are only trading equity funds with the MTR. Why not trade silver and copper.