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Turbo Model
Classic Model




Signal Update
Current Signal Performance as of
Signal Type
Trade Date
Index
Return since issued
Nasdaq 100
Russell 2000
S&P 500
QQQQ

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
QQQQ

Note: QQQQ returns are included for continuity sake.

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Market Update
Markets moved higher Tuesday but gave back their gains on Thursday after the Fed's decision to increase the funds rate by 25 basis points to 3.25%, its ninth consecutive hike. Even though the decision had been widely anticipated and the Fed said that the economy is fine, the fact that it signaled that more hikes are coming apparently unnerved some investors. On Friday, the June ISM index of manufacturing activity came in at 53.8%. The number was better than expected and is indicative of an expanding economy. Also, the prices paid component of the index decreased significantly, suggesting that inflation is under control.

Overall, with the exception of small caps, markets did not move much this week. Indeed, the Russell 2000 was the best performer with a weekly gain of 2.00%, while the S&P 500 finished 0.24% higher. Both indices remain above their 50-day and 200-day exponential moving averages (EMAs). As for the Nasdaq 100, it lost 0.64% on the week and is now sitting just below its 200-day EMA. There is no change for us and our Buy signal remains active.

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Trend Timing School
Independence Day

As our readers in the United States know, we owe this prolonged Holiday week-end to the fact that Monday is the 4th of July, known here as Independence Day. While we preciously value the personal freedoms we enjoy daily, we are not really qualified to comment on historic and patriotic matters. On the other hand, since we are in the "wealth building" business, when it comes to financial independence, we do not hesitate one second to express our views.

We understand it is not easy, and certainly not a given, to be able to dream of and implement a wealth building plan for financial freedom. Yes, there are circumstances beyond our control. Many did not get a sufficient education, or have to work several jobs to make ends meet. Most of us are at the mercy of an employer, or of a prolonged illness, and a job loss could be catastrophic. However, the majority living in this country has the opportunity to find a job, earn a decent living and plan for their retirement.

What does financial independence mean anyway? It can be having a job and earning enough money to move out from your parent's house and strike out on your own. Another view could be that you achieve financial independence on the day you leave everything behind for that life on the beach of a small island, never having to work another day. For others it is more the freedom of choice, to do what you want when you want.

Many feel that what's really important in life is to have the health and time to be with family and friends and to do what you enjoy. In this case financial independence is to achieve a level of affluence that gives you the means and the time.

We like to define financial independence as taking control of our financial future. The view we espouse is that anyone that has taken the time to set a goal, size it, develop a plan to get there, and has begun implementing that plan step by step has taken control of their financial destiny and therefore has already achieved financial independence. It is in your power and yours alone to make it happen. Your goal may be more ambitious than mine, and our plans may be radically different. It may not be a "retire filthy rich at 45" blue sky goal, but you know what you are getting and how to get it.

Dreams not accompanied by specific "how to get there" plans merely remain unattainable dreams.

The plan should be very simple as it lays out what you are earning, what you are spending, what you are saving, and how much your savings appreciate. You can enlist the help of a financial planner or access the numerous resources available on the Internet such as various types of calculators and interactive tools to help you craft your own specific goals and schedules. We cannot do it for you. Each and every one of us has to come to terms with our wealth building ambitions. What we contribute is the Trend Timing system and strategy to extract the highest return from the stock market over the long term while minimizing the downside risk. The rest is up to you. When's your Independence Day?

And for those of us fortunate enough to have achieved our financial independence already, there is no time like Independence Day to express our thankfulness.

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FAQ of the Week
Question: What are index reconstitutions?

We have on occasion mentioned index reconstitutions when they have a marked impact on the market data that feeds our Model, as we did in last Friday's Market Update (as well as a similar one a year ago on June 25, 2004). Generally, the companies that own and manage stock market indices perform annual reviews of the companies that make up these indices (the constituents). The review process consists of matching the index' rules and objectives against the current list of constituents as well as other companies for potential addition. The net effect is that some number of companies will be removed because they do not meet the criteria any longer and others with a better fit will be added.

The recent example is about the Russell reconstitution which happened on Friday June 24, 2005. The new constituents include the 3000 companies with the highest market capitalization from all eligible. With the Russell 3000 defined, now come the Russell 1000 which is the 1000 largest in the Russell 3000, and the Russell 2000 which is the 2000 smallest. Excluded companies are the ones trading below $1.00, or companies domiciled outside the U.S. This year, 206 new securities will be added to the Russell 2000, and 210 securities have been deleted, which represents a 7.6% turnover. Unless you own stock of one of the companies getting added or deleted, you should see no impact from such reconstitutions.

The reason we mention reconstitutions is that as they occur they can disrupt some of our data by creating an artificial spike in volume when all the ETFs and funds that follow the indices have to buy and sell all these companies at the same time. For us the matter is even more acute because the bulk of the Russell 3000 companies also happen to be in the Nasdaq Composite Index which drives our Model.

Warm wishes and until next week.

The TimingCube Staff

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