Friday, August 10, 2012

Update for Friday, August 10th -- Combo Timer Signals LONG

I'm always conflicted when a timer fires long at the top of a local peak. We have this situation as of the close of markets on Thursday, August 9th -- the GGT Combo Timer, which is comprised of an intermediate-termed timer and a long-term timer, has signaled that we should be long in the market on longer time scales.

A couple of items are notable:

1) we are above the 200d MA. It will be critical to stay above this level if we are to see the long-term trend remain intact.
2) we whipsawed this signal in November 2011. That situation was a bit different, as the 200d was resistance, not support, and we never cleared the 200d in the time leading up to the signal.

Overall, this timer combo is my best performing signal over the long haul. Here are the stats:

Just because it's the best performing does not mean it cannot fail. 6 out of the 20 total transitions have failed, so keep that in mind. Had you invested in the GGT index, your worse trade would be -2.41% and your best trade would have been 19.6%, so keep that in mind too.

20 trades is a weaker number than I like -- but it runs back from 9/2008 and when this timer does go long, it typically keeps you long for a period of time, contrasted with shorter-termed timers (e.g. Pascal's MF, etc.)

In terms of all the timers I track, the performance since 9/08 is solid:

Of course, you need to do your own diligence and make your own decisions on what you want to do as next steps.

For me, I'll most likely open a 0.5% position in the major index ETFs and add to them on a pull-back, for a maximum of 2% exposure in each. I expect that the markets will pull back here in the next few days, giving my Elder-entry methods a chance to work.

As far as stocks -- and this is what bothers me -- although we have some solid leaders, they have been leading for some time, we appear to be hitting some resistance overall, and I expect that we'll have a pullback. Additionally, I've been traveling, so I've been watching ETFs more than stocks and need to take some time this weekend to start an in-depth review. 

It is highly unlikely that I will move into stocks today, intending only to review the broader ETFs at this time.