04/14/2013 Mousetrap

[Timothy Clontz]

Just a short timing note.

My full model has an experimental hedged version, which reflected a market with an 80% long bias yesterday morning.

After the selloff that version of the model now reflects a 90% long bias.

An ideal hedged version, however, would still be 100% long because it only trades once every 1-2 weeks.

Please keep in mind that this version of the model is still in testing and I do not plan to list those trades whenever they may occur. The public model is long-only. Also, since the holding period on my model is longer than 1 quarter, it is not designed to navigate around short term corrections. What the model DOES indicate, however, is that there is no sign yet of a market top.

In June-July 2007 there was a violent selloff that quickly reversed back to an all-time high. Most traditional market timers would have lost money in both directions. Don’t try to get fancy here unless you have a VERY sophisticated model.

(This is just a generic blog note, that I'm copying here for reference. I'm not including Pascal on my "don't try this at home" warning, because he's one of the two people on the planet I WOULD follow around a correction.)

[Timothy Clontz]

The sector model has sold XLB and bought XLI.

[Timothy Clontz]

More whipsawing in the sector model. Selling XLI and buying XLB.