Resources
on ETF trading and more
This reference
page places a wealth of detailed information at your fingertips
including your best investment choices, how to implement strategies,
and definitions for many of the specialized investing terms used
on our Web site. In addition to ETF trading we also detail mutual
fund trading strategies implemented with the Direxion, Profunds
and Rydex fund families. Beyond trading QQQQ
(the Nasdaq 100 index tracking stock) this page lists many alternative
investments.
To facilitate your search of past articles we provide a topical
index for the Trend Timing School editorials and
FAQ of the Week answers.
|
What to trade? |
 |
Our Trend Timing
Model reflects the broad market and not a particular security or sector.
Thanks to the long term orientation of the Model, the same unique
signal has historically achieved very high correlation with numerous
market indexes, US and international. For each index we follow you
can find several investment vehicles such as the Nasdaq 100 index
tracking stock
for ETF trading or the corresponding Nasdaq 100 fund from Direxion,
Profunds or Rydex. Investors who prefer trading individual stocks
instead of broad market indexes might want to look into a related
service called TradeGuru.
Our site follows and reports broad stock market indexes, both U.S.
and international. While all three generally move in unison, they
represent slightly different facets of the market, with the largest
non-financial companies on the Nasdaq Stock Exchange (Nasdaq 100),
a broad medium/small-cap stock index (Russell 2000), and a broad large-cap
index (S&P 500), they present a further opportunity to diversify,
or optimize, depending on individual preference.
Index tracking investments mostly fall in two categories: Exchange
Traded Funds (ETFs) and mutual funds.
Our investments of choice are ETFs, for their inherent diversification,
liquidity, and low-cost. Similar to stocks, ETFs can be bought long,
sold short, on margin, and can be traded at the market open the day
following a signal change. Note that double, inverse, and double inverse
ETFs have become available, reducing the need for shorting and margin
trading. Mutual funds, on the other hand, are usually traded at the
market close. However, since mutual funds can be found to match, double,
inverse, and double inverse performance objectives for most indexes,
they can be used to implement all four strategies and are viable alternatives
for qualified retirement accounts. Direxion,
ProFunds and
Rydex offer
fund families that are suitable for that purpose.
Investing
with Index ETFs |
Index
Ticker |
Country |
Index
name |
Long
ETF Ticker |
Short
ETF Ticker |
North/Latin
America |
|
Brazil |
Bovespa |
|
--- |
|
Canada |
S&P/TSX
Composite |
|
--- |
|
Mexico |
IPC |
|
--- |
|
Large
Cap Dow Jones 30 |
Dow
Jones Industrials |
|
|
|
Wilshire
5000 |
Dow
Jones Wilshire 5000 |
|
--- |
|
Large
Cap Nasdaq 100 |
Nasdaq
100 |
|
|
|
Entire
Nasdaq |
Nasdaq
Composite |
|
--- |
|
Small
Cap Russell 2000 |
Russell
2000 |
|
|
|
Mid
Cap S&P 400 |
S&P
400 |
|
|
|
Large
Cap S&P 500 |
S&P
500 |
|
|
|
Small
Cap S&P 600 |
S&P
600 |
|
|
Europe |
|
Austria |
ATX |
|
--- |
|
Belgium |
BEL-0 |
|
--- |
|
France |
CAC
40 |
|
--- |
|
Germany |
DAX |
|
--- |
|
Italy |
MIBTeL |
|
--- |
|
Spain |
IBEX
35 |
|
--- |
|
Sweden |
Stockholm
General |
|
--- |
|
Switzerland |
SMI |
|
--- |
|
UK |
FTSE
100 |
|
--- |
Asia/Pacific |
|
Australia |
All
Ordinaries |
|
--- |
|
Hong
Kong |
Hang
Seng |
|
--- |
|
India |
BSE
30 |
|
--- |
|
Japan |
NIKKEI
225 |
|
--- |
|
Malaysia |
KLSE
Composite |
|
--- |
|
Singapore |
Straits
Times Index |
|
--- |
|
South
Korea |
Seoul
Composite |
|
--- |
|
Taiwan |
TSEC
weighted index |
|
--- |
Investing
in international funds comes with a set of specific risks which at
times can include country or regional economic/natural/political issues
impacting local stock markets, poor correlation with world markets
and/or TimingCube
signal, high volatility, low liquidity, currency fluctuations, and
divergence between country indexes and country funds, especially closed-end
ones.
1The BSE 30 India market index is not currently tracked by an ETF. The only available funds for India are either closed-end funds such as IFN or Exchange Traded Notes such as INP, all of which present significant risks, short comings in tracking the India index and unpredictable price premiums/discounts. Read the December 14, 2007 FAQ of the Week for more details.
Investing
with long/short index mutual funds
|
Index
|
Direxion
|
ProFunds
|
Rydex
|
Tcker
/ Geography
|
Index
Name
|
Fund
Name
|
Beta
|
Fund
Name
|
Beta
|
Fund
Name
|
Beta
|
|
|
Dow
Jones Industrials
|
|
1.25
|
|
2.0
-2.0
|
|
2.0
-2.0
|
|
Nasdaq
100
|
|
1.25
2.5
-2.5
|
|
1.0
-1.0
2.0
-2.0
|
|
1.0
-1.0
2.0
-2.0
|
|
Russell
2000
|
|
2.5
-2.5
|
|
1.0
-1.0
2.0
-2.0
|
|
1.0
1.5
-1.0
2.0
-2.0
|
|
S&P
400
|
|
2.5
|
|
1.0
2.0
-2.0
|
|
1.5
-1.0
|
|
S&P
500
|
|
-1.0
2.5
-2.5
|
|
1.0
-1.0
2.0
-2.0
|
|
1.5
-1.0
2.0
-2.0
|
|
Developed
Markets
|
MSCI
EAFE
|
|
2.0
-2.0
|
|
2.0
-2.0
|
---
|
---
|
Emerging
Markets
|
Various
|
|
2.0
-2.0
|
|
2.0
-2.0
|
---
|
---
|
Japan
|
Various
|
|
2.0
|
|
2.0
-2.0
|
|
1.25
|
Note
1: the lists of indexes, ETFs and mutual funds in this
section are by no means exhaustive, but they have worked well for
us and our subscribers. For our international subscribers looking
to apply our strategies and signals to their local stock market,
we recommend verifying the correlation, and then finding the local
investment vehicle that tracks their country's main stock exchange.
Note 2: if your company's 401(k) retirement plan
does not offer any of the ETFs or mutual funds we list, you should
implement Strategy 1 using the available investment vehicle that
is most closely correlated to the Nasdaq 100
, Russell 2000
or S&P 500
index. Your returns will not be as great as if you used leverage
but you should still significantly outperform a Buy and Hold approach
over the long run.
To exemplify the trading involved with implementing our strategies
with ETFs and long/short mutual funds, we provide the following
table to follow three indexes and two fund families (ProFunds and
Rydex).
Implementing
the strategies |
| |
Signal |
Nasdaq
100 |
Russell
2000 |
S&P
500 |
Strategy
1
Long Only |
Buy |
|
|
|
Sell
or
Cash |
Cash
or
Money Market Fund |
Cash
or
Money Market Fund |
Cash
or
Money Market Fund |
Strategy
2
Long Only
with
Margin |
Buy |
|
|
|
Sell
or
Cash |
Cash
or
Money Market Fund |
Cash
or
Money Market Fund |
Cash
or
Money Market Fund |
Strategy
3
Long & Short |
Buy |
|
|
|
Sell |
|
|
|
Cash
|
Cash
or
Money Market Fund |
Cash
or
Money Market Fund |
Cash
or
Money Market Fund |
Strategy
4
Long & Short
with
Margin |
Buy |
|
|
|
Sell |
|
|
|
Cash
|
Cash
or
Money Market Fund |
Cash
or
Money Market Fund |
Cash
or
Money Market Fund |
*
This fund matches 150% of the corresponding market index.
Note: when the signal changes, any existing position
should be liquidated before the new one is taken.
|
When to trade? |
|
TimingCube's
Model is run at the end of each trading day. If a new signal is issued,
it will be posted on this Web site and accessible by subscribers at
the Signal by Phone number by 9:00 pm ET that same day. Subscribers
are also notified of the signal change by e-mail. In order to achieve
the full benefit from the signal, you should act on it as soon as
possible. If
your selected investment vehicle is an ETF, your order should be
placed before the market opens on the next trading day. Since ETFs
trade like stock, they can be bought or sold at market open. All
performance results posted on this site assume the trading occurs
at market open, the day after a signal change. This is the only
realistic way to measure performance, as you could not possibly
have acted on the new signal any earlier.
If your selected
investment vehicle is a mutual fund, your order should be placed
before or during the trading hours of the day following the signal
change. Since most mutual fund families only calculate the Net Asset
Value (NAV) at the end of each trading day, this ensures that you
will buy the mutual fund at the first available price. This is a
significant difference between ETFs and mutual funds: whereas you
can buy an ETF right at market open, you in effect have to wait
until market close to buy an equivalent mutual fund. Over time the
performance impact of the one day delay should be fairly minor but,
nevertheless, you should be on the lookout for fund families that
are starting to offer intra-day mutual fund pricing.
|
Investment Book References |
|
 
The Age of Turbulence: Adventures in a New World
A book by Alan Greenspan
 
Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics (Agora Series)
A book by William Bonner and Lila Rajiva
 
Greenspan's Fraud: How Two Decades of His Policies Have Undermined the Global Economy
A book by Ravi Batra
 
Stock Trader's Almanac 2008 (Stock Trader's Almanac)
A book by Jeffrey A. Hirsch
 
A Random Walk Down Wall Street
A book by Burton Malkiel
Richest
Man in Babylon
A book by George S. Clason
 
Trend
Following: How Great Traders Make Millions in Up or Down Markets,
New Expanded Edition
A book by Michael W. Covel
 
Technical Analysis of Stock Trends, 8th Edition
A book by Robert D. Edwards and John Magee
 
Technical
Analysis from A to Z, 2nd Edition
A book by Steven B. Achelis
Standard & Poor's Guide to Sector Investing 1995
A book by Sam Stovall
 
How to Make Money in Stocks: Desk Diary 2005
A book by William J. O'Neil
 
All About Market Timing
A book by Leslie N. Masonson
 
Investor's
Business Daily
The
Stock Trader's Almanac 2007
Three
Billion New Capitalists: The Great Shift of Wealth and Power to the
East
A book by Clyde Prestowitz
|
