We have 4 different "market timing" tools that we employ in our analysis. Three of them are purely "technical" The fourth one is based both on technicals and fundamentals, and the duration of its signal is expected to last 3-6 months. You can read about the intermediate term model in detail in out tutorial section (see tutorials) We would like to discuss the three that are based only on technical factors, each one of which can be used to "time" the market, assuming one wishes to enter/exit the market purely on a technical basis.

For practical purposes in order to demonstrate how these indicators work in real life, we have based our example on the closing prices of 6-6-03.

1) THRUST OSCILLATOR:

The first timing indicator is the Thrust Oscillator. This indicator can give two type of signals, a short term one, and a more intermediate term one. Short term signals are given simply when there is either a positive, or, a negative cross-over. This type of signal can be expected to last between 2-5 days. Positions can be entered the second day after the cross-over takes place if  price is confirming the cross-over, with trailing stops. There is no telling how long the signal will last, or, what the magnitude of the move will be, or what the risk/reward ratio of the signal is, it simply tells that the index is expected to move up, or down for the next few days. The second and more reliable type of signal is when a positive/negative cross over is accompanied by a positive, or, negative divergence that has taken place over several weeks. This type of signal tends to be more reliable, and it can last several weeks. Positions can entered the second day after the cross-over takes place if  price is confirming the cross-over, with trailing stops. We have complete confirmation if price breaks down thru support. See chart below:

Notice that by this indicator we may be getting an intermediate term sell signal. We have a negative cross-over and a negative divergence, however it is too early to tell because we have yet to have a second day of follow thru, and price has not broken down thru support.

2) TREND INDICATORS:

The second timing indicator is the "Trend Indicator." This indicator is comprised of two variables, the 10 day trend and the 20 day trend. When they are both moving up, the trend is up, when they are both moving down the trend is down, when they are moving in opposite directions the trend is neutral.  Long positions can be entered as follows: 50% of the intended position one day after the 10 day trend turns up, and another 50% one day after the 20 day trend turns up, EXIT 75% of the the entire position  at the opening after  the 10 day trend turns down, and the remaining 25%, at the opening, one day after the 20 day trend turns down.  Conversely, short positions can be entered as follows: 50% of the intended position one day after the 10 day trend turns down, and another 50% one day after the 20 day trend turns down, EXIT 75% of  entire position  at the opening, one day after  the 10 day trend turns up, and the remaining 25% at the opening,  one  day after the 20 day trend turns up. See how one would have exited/entered the market following the 10/20 Trend indicator. (The blue line is the 10 day trend, the red line is the 20 day trend)

Notice that this indicator doesn't tell us anything about the risk/reward of the position we are taking, about the duration of the signal, or about the magnitude of the move. It simply tells us that the trend is either up, or down. Traders should employ this tool if they wish to make decisions simply with regards to the direction of the trend.

According to this indicator, the trend is still up, thus no "exit" signal yet.

3) The QUANTIFIERS:

The third and most complex purely technical "timing" indicator is the "Quantifier."  The Quantifiers  are a composite indicator of  MACD, Stochastics, Aroon, ADX, 10 day SIs, 20 day SIs, 50 day SIs, SI25s, 10 day BSEs, 10/20 day TIs, SMIs, TOs, McClellan Oscillators and Summation Indexes. They illustrate the overall technical condition of the markets. Above zero and rising, they indicate an overall  strong positive technical background. Below zero and falling, they illustrate a strong negative technical climate which is getting even worse. Below zero but rising, they illustrate a poor technical environment that is improving. Above zero and falling, they illustrate a positive technical environment that is deteriorating. Entry signals are generated when they penetrate the zero line on the upside, and exit signals are generated when they penetrate the zero line on the down side. Long positions can be entered as follows: 40% when the Quantifier penetrates the zero line, another 30% when it moves above 15, and another 30% after price begins to move up following a decline during which the Quantifier held above zero.  75% of the position is exited when the Quantifier penetrates the zero line to the downside, and the remaining 25% is exited after the Quantifier falls below -15. The opposite directions should be followed with regards to short sales. See the chart below:

Notice that this indicator doesn't tell us anything about the risk/reward of the position we are taking, about the duration of the signal, or about the magnitude of the move. It simply tells us whether the technical environment is positive, or, negative and how positive, or, negative the environment is. Traders using this timing tool, make decisions under the assumption that a "positive" environment results in higher prices and vice versa.

According to this indicator, the environment is still positive, thus, no exit signal yet.

In conclusion, we got one out of the three timing indicators, giving us a potential "exit" signal, it should be considered a warning, but it is too early to write the rally's epiphany. Having said that, it should be kept in mind that if the signal from the Thrust Oscillator turns out to be correct, the ensuing decline should be expected to be around 10%-15% .

Please notice that all three of the above indicators a) can be used each one by itself,  b) they are purely technical, and c)  they do not tell us anything about the risk/reward of the position we are taking, about the duration of the signal, or about the magnitude of the move. However, they are pretty accurate when it comes to generating signals that are based purely on the technical characteristics of the markets. Subscribers who are interested in entering/exiting the markets simply on technical grounds,  may wish to employ just one of them in making decisions, or a combination of the three. All three of them are displayed every day in our analysis.  The easiest one to use, and the least one subject to interpretation errors, is probably the Quantifier.