Signal Type	Trade Date	Index	Return since issued
		Nasdaq 100
		Russell 2000
		S&P 500

Market Update

After a quiet start to the holiday-shortened week, markets moved lower on Wednesday and Thursday. The negative tone was especially apparent Thursday as technology stocks sold off after investors were disappointed by Apple's latest quarterly results. A higher-than-expected reading on consumer inflation for December also did not help. The Nasdaq Composite took a hit as a result, and the drop occurred on increased volume, which caused our Model to issue a Sell signal after the close Thursday. Both the Nasdaq 100 and the Russell 2000 are now lower than their late November levels and appear to be topping. On the economic front, oil prices edged lower this week before rebounding Friday.

The Nasdaq 100 and Russell 2000 respectively lost 2.60% and 1.15% on the week. The
S&P 500 fared better, as it was basically unchanged. All three indexes remain above both their respective 50-day and 200-day exponential moving averages (EMAs).

For its part, our World Index Ranking portfolio outperformed the US averages as it posted a 1.27% gain this week. The portfolio consists of the 5 top-ranked world indexes as of January 5, which marked the beginning of the current 4-week holding period.
Please note that since we now have an active Sell signal, the World Index Ranking approach calls for selling your holdings if you follow the "Long Only" or "Long and Short" strategy. You should remain invested in the top 5 indexes only if you follow the "Buy and Rebalance" strategy, which stays invested at all times. Please go to our "Strategies" page for all the details.

We now have a Sell signal in effect.

Trend Timing School

About the TimingCube Model

We are often asked if we can provide additional information on how TimingCube issues its signals. Because of the proprietary nature of our Model, we obviously cannot disclose all its inner workings or we would no longer have a viable service. What we can say is that our Model is primarily based on price and volume action on the Nasdaq Composite index.

Why do we use the Nasdaq Composite to feed our Model? It turns out that this index is an excellent proxy for the market as a whole. This is a key requirement, as the Trend Timing approach seeks to recognize broad market trends so that we can act on them and profit accordingly. Our data source must therefore represent a wide variety of industries and stocks with diverse market capitalizations. It must be well established and regarded, and it must be widely available. The Nasdaq Composite certainly fits the bill. It is comprised of all domestic and international based common type stocks listed on the Nasdaq Stock Market. Today, the index includes approximately 3,500 companies, more than most other stock market indices. Because it is so broad-based, it is one of the most widely followed and quoted major market indices. Further, our reseach has shown that it correlates very well with other US-based and international market indices over the long run. This is the reason we have only one signal: when there is a signal change, we can use it as-is to trade any broad-market index of our choosing, thanks to the high correlation with the Nasdaq Composite. Our studies show that this approach works better than trying to construct a separate signal for each individual index. Our Model requires just the right amount of volatility to detect the proper turning points of the broad market. Many indexes just simply have too much "noise", or are not volatile enough to accurately convey the market trend turning points in a timely fashion. For example, when compared to the Nasdaq Composite the S&P 500 movements are rather slow and tame. Therefore, it is more difficult to use the latter index to detect a true trend change early enough and to eliminate false signals.
In conclusion, the Nasdaq Composite provides exactly the amount of volatility we need and it is therefore the sole source of data we use to generate our signals.

Now that we know what our data source is, namely the Nasdaq Composite, how do we use it? Our Model relies on several technical indicators, most of them proprietary, to determine when the trend changes. It does so by primarily studying price and volume action.
Price itself, of course, is a key ingredient of many timing systems. Many well-known indicators, such as moving averages, are based on price alone. But to us, price is not enough. We also want to have a look at what the trading volume is telling us. Volume reflects the number of shares traded in a particular stock or index, and is a direct manifestation of the money flowing into and out of the stock or index. The theory behind all volume indicators is that quite frequently, volume precedes major price moves. Volume is also very accurate in showing the buying and selling activity of the big institutions that move the market. There are numerous ways to look at volume, including fancy mathematical formulas and charting techniques, such as the well known and popular Chaikin Accumulation/Distribution Line. As with everything in Trend Timing, we like to keep it simple and use common sense. At the core, we want to see price and volume go in sync. In a sound market, prices will go up while volume increases, as the big players who drive the market put more money to work. By the same token, if prices start dipping on higher volume, it might be an indication that institutions are selling out and that the market may be turning. We therefore measure the relationship between price and volume over a period of time to detect patterns that indicate that a turning point might be at hand. Because of the way it is designed, our model will never spot the absolute top or bottom (which nobody can do consistently anyway) but it will confirm a shift once it has already started to happen. Upon confirmation, it will issue the corresponding signal. We often get asked if our Model factors in other information such as fundamental or economic data, external events or opinions of any kind. The short answer is no. The Model is technical in nature and is therefore completely unemotional. It only reacts to market action, not to what we or anyone else might think will happen next.

Finally, we want to remind everyone that the TimingCube Model we just discussed issued a Sell signal after the close on Thursday, January 18. If you have not acted yet, it is not too late. You can review our "Strategies" page to help you decide how you want to act on the signal. Should you want to implement one of our "Long and Short" strategies, the "What to Trade" section of our "Resources" page lists many investment vehicles you can choose from. New possibilities have emerged recently, such as the availibility of the ProShares inverse ETFs. Even though you are not allowed to short in retirement accounts such as IRAs, you can achieve the same effect by simply buying an inverse ETF instead.

If you follow our World Index Ranking approach, the bottom section of the "Strategies" page provides detailed explanations on what you should do. Only if you follow the "Buy and Rebalance" strategy should you remain invested in the top 5 indexes, as the strategy seeks to be invested at all times and therefore ignores the current Sell signal. The other two strategies call for selling your holdings. You can then either stay in cash or short the QQQQ. An alternative to shorting QQQQ is to simply buy the corresponding inverse ETF (ticker symbol: PSQ).

FAQ of the Week

Question: Why am I not receiving your e-mails?

Some subscribers have contacted us to report that they did not receive our latest Weekly Update notification or signal change e-mails. While we can ensure that our e-mails are sent to all subscribers (and they definitely are), we unfortunately have no way to guarantee that these e-mails will be properly delivered. If you do not receive our e-mails, the most likely explanation is that they are wrongly filtered out by your ISP or your e-mail software. Because of the sharp increase in junk mail traffic over the past few months, many ISPs have tightened their spam filtering techniques. As a result, some perfectly valid e-mails such as ours are sometimes filtered out and simply discarded by mistake. We of course do not spam, but because we send our e-mail messages to many people simultaneously, your ISP might wrongly assume that we do and get rid of the messages. If you are in this situation we would advise that, in addition to the usual precautionary steps we recommend below, you contact your ISP directly to correct the problem. In particular, you can ask them to whitelist our sending e-mail addresses (see below) and domain name (timingcube.com).

If you have an "unwanted mail" or "bulk" folder of some kind, you might want to check its contents to see if our message was not stored in it by mistake because of some over-zealous anti-spam filtering. One of the most effective ways to prevent this from happening is to include friendly e-mail addresses in your address book. The three addresses from which TimingCube sends e-mails are:

• info@timingcube.com
• sales@timingcube.com
• support@timingcube.com

Please use the "Test e-mail" feature from the bottom of the "Current Signal" page to check the communication channel between you and us.

Warm wishes and until next week.

The TimingCube Staff