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Market Timing

Market Timing. Catching Tail Winds. Presented by Herb Geissler, Managing Director of St.Clair Group May 2014. Basic Uses of Timing. Determine direction to select strategy Pinpoint sound entry and exit points Evaluate vigor to enhance with leverage (margin money or options).

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Market Timing

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  1. Market Timing Catching Tail Winds Presented by Herb Geissler, Managing Director of St.Clair Group May 2014

  2. Basic Uses of Timing • Determine direction to select strategy • Pinpoint sound entry and exit points • Evaluate vigor to enhance with leverage (margin money or options)

  3. Timing Is Personal • Fear of draw-downs increases frequency of trading and determines time horizon • Alexander Elder advocates “three time-screens” • Tolerance of volatility determines Universe (index) to use • Large Caps have lower growth, returns & volatility • Stock picking involves timing its’ sector, as well as timing the broad market • “Risk-on, risk-off” switches ‘tween defensive and momentum picks • Hedge funds accelerate sector rotation and volatility

  4. Different Time Horizons • Go with Tidal Flow • Two corrections every year = intermediate trend • Move with the Waves • Forays within bull or bear legs of corrections = short-term positions • Ride the Ripples • Swing trading the quick moves, as breezes shift and sectors rotate

  5. Method Matches Horizon Tides • Intermediate traders like 10 or 12 month Moving Averages to signal major reversals • During Kuznets Bear Market, 4-mo MA is better • Position traders use the 20 or 50 day moving average for profit-taking and the 200 day for keeping out of trouble

  6. Monthly Moving Averages Catch the Major Turning Points Intermediate Trend Reversals 12 mo MA 10 mo MA 4 month MA

  7. For position tradersMA50 Tracks Bull Trend; MA200 Marks Bear Territory

  8. Method Matches Horizon Tides Waves • “No Fear” when VIX is under 20

  9. “No Fear” when VIX is under 20

  10. MA20 of $NASI or $NYSI keeps the wind to your back McClellan Summation Index MA10= heads-up MA20= Pull trigger

  11. Dual Moving Averagesof Russell 2000

  12. 50/50/0 Rules Keep Position Traders on the Right Side of the Market

  13. 50/50/0 Rules For Position Trading a Stock Shorting when EMA20>EMA10 is also profitable

  14. Method Matches Horizon Tides Waves • “No Fear” when VIX is under 20 • McClellan Summation Index is over MA20 • Dual Moving Averages of key index are + • 50/50/0 Trading Rules for a stock or ETF

  15. Which Timer Is Best?(remember, it’s personal) • Rate of Return (during selected time frame) • Maximum and avg monthly drawdown • Success Rate (% winners) and Profit Ratio (avg win %/ avg loss %) multiply to over 1.5 (similar to Tharp’s Expectancy) • Frequency of trading and data-posting

  16. Key Take-Aways First and foremost, get to know thyself Dr Jekyll (intermediate traders) • FED QE likely to sustain Bull market til Autumn • Shift into defensive positions when indexes drop below 4-month moving average Mr Hyde (position/swing traders) • Remain Long when $NYSI > MA20 and dual MAs are both positive • Use 50/50/0 discipline for entering/exiting positions in stocks or ETFs

  17. Questions?? • A panel of experienced investors will first give you a brief summary of their style • Then will respond to your questions about market direction and timing

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