Assigning trip lines is the first step to signaling
Bull or Bear. The Mid-term Indicant's MTI-RYS model needs two reasons to
signal Bear, but only one reason to signal Bull. That is because the
market goes up more than it goes down. In the 5,458 weeks between January
6, 1900 and August 6, 2004, the Dow Jones Industrial Average went up 3,031
times. During this period it went down 2,395 times.
If the market index falls
below the Red curve and the incumbent trip line, a Bear signal is
triggered. If the market moves above the Incumbent Trip Line (ITL) or either the
Red (R) or Yellow (Y) curve, a Bull signal is triggered. Also, if the
market bounces off the yellow curve, a bull signal is issued. As always
you are notified by email when a signal occurs and the Website is
continuously updated.
Scroll down to understand this
process. However, do not feel like you have to understand the process.
Some readers will want to understand; others will not. It does not matter
either way. The
Indicant will simply signal Bull or Bear when the above rules call for it for the
major market indices and notify its members.
This process is complicated. The research was
originally intended to derive a simple solution to identifying bull and
bear markets. The research concluded no mathematical model could achieve
this alone. Heuristics, coupled with mathematics, is required to perform
this task. The heuristic is the intellectual property of the Indicant
Stock Market Report and will never be revealed to the public. This is
based in the phenomenon of commonality. When a critical mass (number of
investors and traders) start trading on the same rules, the rule they are
trading by ceases to work. That is why the Indicant limits the number of
members.
There are two steps involved: 1) Assign Trip
Lines at the conclusion of bearish (BRS) cycles. 2) Signal Bull or
Bear at the appropriate time.
This model is esoteric enough to mitigate the
influence of the phenomenon of commonality. In other words,
the model will be difficult to copy and share with the masses.
This model has demonstrated an ability to outperform
Buy & Hold by over 2,000% for the last 104 years. It is expected to do the
same in the future with one possible exception. BRS-1, the first bearish
period of the year, has not been bearish since 1980, but extremely bearish
from 1900 through 1980. The phenomenon of the Y2K and NASDAQ bubble of the
1990's temporarily disfigured its prior reliability. That reliability is
expected to return. The development of Exchange Traded Funds by the
Indicant has revealed significant empirical evidence that the BRS-1 cycle
will again become bearish. Although this has
little impact on the assignment and subsequent construction of Trip Lines,
it may have to be modified if it does not return to historical standards.
The development of the heuristic, contained herein, did not allow for
modifications. Heuristic modeling requires consistency throughout the
model's regression horizon or the model is fake. The research staff at the
Indicant views fake with disdain.
BRS-1 worked very well expressing seasonal
bearishness from 1900 through 1980 and is expected to do so again in the
early 2000's. The Indicant Research staff will continue searching for an
even better heuristic. This slight variance has little or no impact on the
performance of the Indicant signaling.
As of August 6, 2004, this heuristic has
generated a balance of over $30,000,000 from a 1900 $10,000 investment in
the Dow30 related stocks. Several funds and the DIA ETF is a complete
emulation of the Dow30 stocks and the Dow Jones Industrial Average.
Buy&Hold has generated only $1,493,280. The MTI-RYS Heuristic has
outperformed Buy&Hold by 2,019.6% in the last 103 years.
The assignment of trip lines is explained in
the below schematic.
