Forum: System: Schulenberg 2X-Hedged IWM (^IWM2)

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7/08/13 (20:51)Craig Schulenberg1Market Timing Indicator + Prediction for 7/9/13
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Subject:Market Timing Indicator and Prediction for 1/26/11
Posted by:Craig Schulenberg (Admin) ( C2 Score: 974)  New msg
Ignore user's posts for week month forever
When:1/25/11 (23:35) 
*** Market Timing Indicator:
The Market Timing Indicator (MTI) is at 1.1509 (barely above the neutral value), but although on the surface our indicators are a bit more positive, we believe that the downside risk remains considerable, and that the market is currently rather dangerous for Long investments. Nonetheless, there is as yet no real evidence that the uptrend has been broken.

The MTI can range from about -2.5 to +2.5, with a 'neutral' value of 1.0. A value of 1.0 will generally be associated with a market that is either stable (holding its valuations) or rising slowly and erratically. Values greater than 1.0 signify a 'long' market, while values substantially below 1.0 (and especially zero or negative) signify shorting situations. Although the MTI is extremely useful (especially in the construction of equity-specific models), bear in mind that it has a reaction time of several days. It is thus not sufficient to use this indicator alone for trading specific equities on a day-by-day basis.

*** PREDICTION for the Next Trading Day:
For Wednesday we say: "The MTI (Market Timing Indicator) has risen very slightly (to 1.1509), thus staying just above the neutral value (1.0). Moreover, we have a BLUE ('relatively' safe) Market Color Code for Wednesday. Nonetheless, although the number of Shorts has greatly diminished, the majority of our signals have gone to Cash. Clearly, our algorithms do not trust this market; our feeling is that the market is fumbling around for a 'top', and that the downside risks are increasing. We expect that the market will at best 'hold' near current valuations on Wednesday".

*** Scoring of Previous PREDICTION:
For Tuesday we had said: "Although the MTI (Market Timing Indicator) has lifted off the neutral stops (neutral = 1.0), it is a very small improvement. Our Market Color Code has also gone to YELLOW (or caution color), and our neural networks suggest that the market will dip on Tuesday ... despite the slightly higher MTI value. The uptrend may not yet have been broken, but the market appears to be seesawing back and forth as it makes up its mind as to its next major direction. The majority of our signals are now in Shorts, or Cash".

How did we do? The Forecast for Tuesday was clearly too pessimistic, although the 'dip' certainly did seem the proper term right up until the closing hour. Then, people who didn't know any better began buying equities -- perhaps in the anticipation of more positive words from the Fed meeting tomorrow.
Schulenberg 2X-Hedged IWM (^IWM2)
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