Intermediate Outlook Moves Negative

"A Dash" is currently reporting our votes to the TickerSense Blogger Sentiment Poll.  Many others choose not to invite this scrutiny;  a little arithmetic shows that these are mostly perma-bears.

In making our vote we use our TCA (trend, cycle, anticipation) model described here.  We report changes only at the end of the week when we make our vote, not on the day when the model shifts.

We are not making recommendations.  We are illustrating how a model can be developed and how it can guide trading.  The market timing is not suitable for everyone for a variety of reasons.  Obviously we believe that our investors benefit from getting the signals on a daily rather than a weekly basis, but that comes with believing in the underlying concept of the model.  It is the difference between having an impression from a few days' trading and using a system tested over time.

The model gives us ratings on the ETF's for the S&P 500, the Dow, and the Nasdaq.  As of Thursday, these all had moved negative, so that is our vote for this week.

How We Use This

This is an intermediate-term model, with a holding period of about one month on the average.  We use the information differently in our various programs.

1. For long-term individual managed accounts it influences the timing of planned buys and sales, not our overall position.
2. For our Sector Rotation Fund it has an immediate effect of changing the overall portfolio, including the purchase of short ETF's.  At the moment, the Sector program has only one long  position and mutliple ETF shorts.
3. For our managed institutional accounts and hedge fund investors it alters the "lean" of the overall portfolio reflected in shorting futures on major indices against positions.

While our fundamental assessment of the market, most relevant to long-term investors, remains bullish, we react to the realities as shown in the TCA model in the ways described.

One of the principles that we are trying to illustrate is the importance of having a strong overall method and sticking to it.  This is important both for individual investors and for traders.

The key is for each to choose  a relevant time frame, something that we discussed here.

The model has been developed over hundreds of cases, emphasizing indices.  While it has an element of anticipation, the strength of the method is getting on the right side of major moves.  It is not going to tell us, for example, when the current negative sentiment on financial stocks is about to change.