Signal Type	Trade Date	Return since issued
		World	U.S.
			Nasdaq 100 (QQQQ) Russell 2000 (IWM) S&P 500 (SPY)

Market Update

Stocks just completed their sixth consecutive week of gains. This is quite a radical change from the precipitous fall the market experienced from September of last year to early March. Digesting their gains of the previous week, the main indexes remained largely unchanged Monday before a weaker-than-expected retail sales report prompted investors to book profits during the next session, causing a 2% drop for the S&P 500. Intel released a solid earnings report after the close but declined to provide sales guidance for the current quarter, spreading skepticism among investors that resulted in an initial drop for the indexes Wednesday morning. The market was able to right itself, however, and by day's end the S&P 500 had gained 1.3%. Positive news on the economic front helped, such as a better-than-expected reading on consumer inflation, with the CPI falling 0.1% in March instead of rising 0.1% as anticipated. Stocks climbed again Thursday, sending the Nasdaq Composite 2.7% higher. The boost was provided by JPMorgan beating earnings expectations and by a housing report that showed that construction of single-family homes has stabilized over the past three months, hinting that the housing market may have finally bottomed. The main indexes added more gains Friday. The market was lifted by better-than-expected results from General Electric and Citigroup, while a University of Michigan survey showing improvement in consumer confidence also helped.

The Nasdaq 100 (QQQQ), S&P 500 (SPY) and Russell 2000 (IWM) respectively gained 1.12%, 1.48% and 2.38% on the week. All 3 ETFs are located above their 50-day exponential moving average (EMA) but remain below their 200-day EMA.

For its part, our World portfolio posted a 1.15% gain this week. The portfolio consists of the 5 top-ranked world ETFs as of March 27, which marked the beginning of the current 4-week holding period.

Our current Buy signal remains in effect.

Trend Timing School

Dealing with your emotions

There are mountains of evidence supporting the fact that individual investors make bad decisions, repeatedly, when they follow their emotions and instincts. So much so that if you go by your emotions, you are almost certain to lose.

Irrefutable proof of this harmful behavior pattern was developed long ago. For example, in a 1994 study by Morningstar, results from individual investors were compared against the results of the 219 growth funds they followed for a five year period. The study showed that the average growth stock fund gained 12.5% per year over the 5 year period, while the average investor in those funds lost 2.2% per year. Why such a huge difference? Why can't we all just buy low and sell high? The answers lie in human psychology and the fact that people are highly emotional creatures. We can all be better investors and make fewer bad decisions if we understand and avoid falling prey to the key behavior tendencies we face every day.

Risk aversion. The underlying cause of risk aversion is that we all want to be proud of our great investment results and avoid the remorse associated with a losing trade. What's even more subjective than pride and remorse is our assessment of risk. For example, when the market is moving down we perceive higher risk than when it moves up, despite holding the same exact investment and that the odds of the market reversing are about the same in both scenarios.

Loss denial. Research has shown another puzzling fact about our risk assessment capabilities, or lack thereof, and our propensity to reach opposite decisions based solely on our current situation. Curiously, investors become more risk averse when facing the prospect of a gain, and more risk seeking when facing the prospect of a loss. They tend to sell more of their winning positions than the losing ones, even though the winning investments they sell subsequently outperform the losers they continue to hold.

The herd mentality. The well known "sheep syndrome" is explained by the reduction of time and effort needed to properly analyze an investment decision if one follows the herd, and the comfort found in knowing that we are not alone in our decision. The instincts and information-processing shortcuts which are highly efficient in our day-to-day lives systematically work against us in the market place. "Herding" is also used frequently as a powerful tool to influence market movements.

People over react. We naturally tend to swing between extremes of optimism and pessimism. Instinctively we look for indications that something bad is about to happen, and the daily deluge of news gives us plenty to choose from. At other times we get carried away with enthusiasm and the desire for good times to last forever. Widely overpriced stocks and market bubbles (the now famous "irrational exuberance") invariably lead to crashes and bear markets, and vice-versa.

Logical fallacies. We all want to believe that we are pretty smart and have good judgment. Unconsciously, our analytical mind is constantly in motion seeking facts and arguments that logically justify and support our gut feelings. When our emotional biases are reinforced by information and the powerful influence of experts or news media who interpret information the same way we do, the pressure to follow becomes compelling.

Given the brutality of the recent market crash, it is today more than ever paramount to avoid being carried away by our emotions. The market fell so quickly that it took many of us off guard, and our human nature might have taken over and made us lose confidence in the investment strategies that we cheered so much in the past. Some may even be tempted to give it up altogether and wait until things cool off. Leaving one's emotions aside, and sticking to a sound investment strategy is the only way to be successful over the long term. Having an unemotional Trend Timing wealth building system like TimingCube guiding us through the arcane of the market fluctuations is key to achieving this goal. Our system protected us from the recent market collapse, and we must remain confident that long-term success is ours as long as we stay disciplined and keep counter productive emotions in check. And if you really feel compelled to trust your emotions, use them as your best contrary indicator and run the other way.

FAQ of the Week

Question: Is it too late to commit to the signal?

At the risk of repeating ourselves, we want to stress again the importance of committing fully to the TimingCube system. With the new Buy signal still fresh, we received several questions from subscribers questioning the timeliness of such a move. Second-guessing the validity of a signal is often the cause of missed expectations and lower actual returns. Our signals are most frequently triggered at a time when our emotions tell us otherwise, so it is often hard for us to act rationally and swiftly when a new signal arrives.

But, as we mentioned last week, the best way to get back on the saddle in case we failed to act immediately is to use the Dollar Cost Averaging technique. Instead of commiting all our funds at once, we can spread it over a certain number of days/weeks, investing equal sums each time until all of our dedicated "TimingCube money" is at work.

Warm wishes and until next week.

The TimingCube Staff