1-17-2013 comment

We had a B5 (trending above the 21-day) market buy signal yesterday bringing the exposure count to +5 (fully invested). This also allowed the power trend switch to come on. A power trend is reserved for rallies that are strong enough that you should struggle to stay long in the market even in the face of apparent weakness. Back tests show this to be the optimum strategy. Of course nothing works perfectly every time. The power trend locks the exposure count floor to +1 (30% invested). The distribution count on the NASDAQ and NYSE Composite is 5, so we are seeing some conflicting signals. This is the type of weakness that the power trend is designed to get you through, hopefully to the other side of a weak spot.