...When To Fold Em?

I have to admit that If I didn't have the benefit of following a reliable timing model I might have cashed in my chips by now. After all the S&P Index May month end close was down 8% from the April month end close. This is in fact more than a "normal" correction and is one of the factors I look at which does point to a potential long term trend change. However, it is only one of a handful of factors that I look at when making a determination as to whether a long term trend change is likely. It's important that you understand that a flip to a green or red arrow only occurs when all factors point to the same conclusion. Right now they do not. There is not unanimous agreement. So the green arrow remains in effect and I'm staying put. This strategy has paid off very well for me in the past...leaving my emotions at the door and making my investment decisions based on a reliable timing model.

IMPORTANT: I encourage you to check in each day next week. The reason is that although the monthly green arrow remains in effect it is rare that the model remains long (green arrow) when there's been a monthly decline of more than 5%. Also, the market is near a very important price level, that if broken, could facilitate a rather dramatic move lower. The last thing I want to have happen is wait until the June monthly close and find the market 15-20% lower than the April close. This would take too large a chunk out of the gains we've seen since March, 2009. So check in each day. If I don't post, nothing changes. If I do post It will be because I believe the long term trend has flipped down (red arrow).

FOR YOUR EDUCATION: I have no educational article for you this week but I think I have some exciting news for you. As you may have surmised by now although the monthly methodology I use has been very accurate in calling the long term turns, it weakness is that in most years there are is at least one, 1-3 month time frame where the market is actually declining or moving sideways. For months I've been researching and back testing a weekly market timing methodology whose objectives are to consistently exit the market as close as possible to a monthly market top and enter the market again as close as possible to a monthly market bottom. Obviously if that could be accomplished the already impressive returns achieved with the long term (monthly methodology) can be dramatically enhanced. The results so far are very promising. I hope to have more to report to you within the next 2-4 weeks.

Have a great holiday weekend everyone. PLEASE take the time to honor your country and the countless veterans who have sacrificed so much for our freedoms by flying your flag!