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Signal Update

Current Signal Performance as of

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

Cumulative Returns since First TimingCube Live Signal () as of

Index	Long Only	Long Only with Margin	Long & Short	Long & Short with Margin	Buy & Hold
Nasdaq 100
Russell 2000
S&P 500
QQQ

Note: QQQ returns are included for continuity sake.

Market Update

More of the same for the major indices. Despite a continued stream of good economic and earnings news, markets failed to move higher again this week. A rally attempt on Wednesday was quickly met with renewed selling. The Nasdaq Composite managed to close slightly higher on Friday, but the move occurred on the lowest volume of the year, clearly showing the lack of conviction among buyers. The Nasdaq 100 and the Russell 2000 finished the week slightly higher, with respective gains of 0.59% and 0.38%. Both indices remain below their 200-day simple moving average (SMA). As for the S&P 500, it lost 0.20% on the week.

Our current Sell signal remains active. It should be noted that the Nasdaq Composite's 10-day exponential moving average (EMA) finished the week below the 200-day EMA, which meets our definition of a bear market. This means that we now are officially in Quadrant 3, defined as a Bear/Sell combination (please refer to our for more information on Trend Timing quadrants).

Trend Timing School

Time and the power of patience

Most investors, regrettably, spend their life digging through mountains of information such as financial news, fundamentals of individual companies, and endless economic indicators. Being very busy and distracted loading up on trivial facts and knowledge, or learning very complicated trading methods, most of them never identify and develop an understanding of the most important ingredients of successful investing: time and patience. Trend Timers have the luxury of an extremely simple wealth building system which takes care of the basic mechanics of how to invest, what to invest in, and when to trade. This simplicity lets us fast forward to the real challenge and learning.

Unless you inherit or win the lottery, building wealth and financial independence involves three components: money, an investment method producing repeatable returns, and time. Time is the great equalizer because no one controls it, it is the same for everyone (except maybe for Einstein and his band of relativists), and ultimately it is the most important factor in the wealth building equation. Time is often defined as a space less continuum marked by an irreversible succession of events and actions between past, present, and future. Time is nothing by itself; it is what we do or don't do along this continuum that matters. The sooner we understand this, the sooner will we take action. Then, as soon as we act, the waiting game begins. This leads us to this week's topic: patience.

Americans and westerners in general tend to be impatient. We don't like to wait and we would much rather have instant gratification. In today's fast-paced, action-oriented, computer-driven world we live in, there still are no get-rich-quick schemes. Patience is one of the hardest things to master in life. Patience comes from the Latin word pati which means "to suffer", and means something like bearing pains or trials calmly or without complaint. The stock market gives us plenty of pains and trials. Markets by definition are unpredictable and their constant ups and downs play havoc with our emotions. We go from excitement one day to panic the next. Two steps forward, one step back.

Wise men, old fishermen and Buddhist monks alike, master patience. The fisherman will tell you that fish turns out to be just a byproduct of patience, and that instead it brought understanding and wisdom. For the monk, patience is one of six perfections that form the foundations of the path to enlightenment. The good news is that we don't have to stand in a river or move to a monastery to learn patience.

We can start with tolerance. Accept the markets for what they are. Don't complain. Learn how to relax and reduce your stress. Breathe deeply, serenity will come. Calm and persistence will go a long way in achieving your financial objectives. Derive hope and optimism from knowing that in time your dreams are yours. Do not get swayed by the market's daily gyrations, but don't despair if the markets or your emotions trick you. Failure is a necessary learning tool for us common mortals. All it takes is to learn from the mistake, and reset the clock of time by trying again.

Trend Timing and patience bring you the power of timing the markets combined with time in the market. And in the end, financial wealth may only be the smallest of your blessings because patience is the wisdom of knowing that all valuable things and understanding in life take time to happen.

FAQ of the Week

Question: What do the index mutual funds daily objectives "Match", "Double", "Inverse", and "Double Inverse" mean?

Our four strategies are typically implemented with index tracking investment vehicles such as Exchange Traded Funds (ETFs) and mutual funds. While ETFs can be bought and sold short, with and without margin, just like stocks, they are not always applicable choices. Some of us may be forced to use mutual funds instead of ETFs because shorting and margin trading are not allowed in qualified retirement accounts, or maybe an ETF we would select is too illiquid and therefore not available for shorting, or we are attracted to the sheer simplicity of trading mutual funds instead.

So-called "bull" and "bear" index tracking mutual funds which are actively managed to simulate the effects of buying or shorting an entire index, with or without leverage, are being offered by several fund families. The "Investing with index mutual funds" table in the "Our Service" page lists some of the funds available from the ProFunds and Rydex families to implement our four strategies with our three favorite indices. The "Daily Objective" column uses the following terminology to describe the funds:

Daily Objective	Definition
Match	A bull fund that seeks to achieve 100% of the daily performance of the tracked index. Buying such a fund is equivalent to being long (buying) the index. On a day the index moves up 1%, such a fund will seek to increase by 1%. On a day the index moves down 1%, such a fund will seek to decrease by 1% (all before fees and expenses)
Double	A bull fund that seeks to achieve 200% of the daily performance of the tracked index. Buying such a fund is equivalent to being long (buying) the index on full margin. On a day the index moves up 1%, such a fund will seek to increase by 2%. On a day the index moves down 1%, such a fund will seek to decrease by 2% (all before fees and expenses)
Inverse	A bear fund that seeks the daily performance of increasing in value when the tracked index declines, and decreasing in value when the index rises. Buying such a fund is equivalent to being short (selling short) the index. On a day the index moves up 1%, such a fund should decrease by 1%. On a day the index moves down 1%, such a fund should increase by 1% (all before fees and expenses)
Double Inverse	A bear fund that seeks the daily performance of increasing in value twice as much as the tracked index declines, and decreasing in value twice as much as the index rises. Buying such a fund is equivalent to being short on full margin (selling short on margin) the index. On a day the index moves up 1%, such a fund should decrease by 2%. On a day the index moves down 1%, such a fund should increase by 2% (all before fees and expenses)

Notes:

There are many variations in the types of funds being offered and before you invest you should read the prospectus.
Before investing in leveraged mutual funds you should understand their idiosyncrasies and read the

Warm wishes and until next week.

The TimingCube Staff