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

Market Update

Stocks powered higher again this week as the rallies continues in earnest. A better-than-expected reading for the index of leading indicators Monday raised hopes that the economy is on the path to recovery. Investors reacted to the news by bidding stocks higher, with the Dow Jones Industrial Average gaining 1.2% on the day. The main averages then proceeded to rise modestly over the next two sessions following positive earnings news from such companies as Apple and Starbucks, before surging again on heavy volume Thursday. This time, the trigger for the rally was the third straight monthly increase in existing home sales in June. The Nasdaq Composite climbed 2.5% on the day, bringing its winning streak to 12 consecutive sessions, a performance not seen since early 1992. Disappointing earnings reports from Microsoft and American Express caused early weakness Friday, but the market eventually righted itself, with the S&P 500 finishing the session in the black to cap another strong week for stocks.

The Russell 2000 (IWM), Nasdaq 100 (QQQQ) and S&P 500 (SPY) respectively gained 5.61%, 3.97% and 3.96% over the five-day span. All three ETFs are located above both their 50-day and 200-day exponential moving averages (EMAs).

For its part, our World portfolio posted a 5.17% gain this week. The portfolio consists of the 5 top-ranked world ETFs as of July 17, which marked the beginning of the current 4-week holding period.

Our current Buy signal remains in effect.

Trend Timing School

Avoiding procrastination

If you are a committed Trend Timer and are currently invested long per the current Buy signal, we commend you, and respectfully suggest you skip this article which is dedicated to those subscribers remaining on the sidelines.

For the rest of us sideliners, we apologize in advance for the maybe somewhat moralizing tone of this commentary and hope it does not come across as patronizing (we certainly do not intend it to be). It is because we know from personal experience that our trend following method provides superior long term results, without the large downside risks of buy and hold, that we always make ourselves the advocates of a key Trend Timing principle:

We try to participate in all significant market moves, up or down

The key word here is "participate". Participation involves resolve and steadfast commitment to execute the trades in a timely manner, without second guessing the signal. A major side effect of standing on the sidelines is that we cannot make money if we are not invested. Not only are we not making up for losses but we are losing ground to inflation, and losing precious time.

There are various reasons for a subscriber to procrastinate and remain on the sidelines. Maybe you are a new member and are trying to decide between getting started now and waiting for the next signal. Maybe, you missed the last signal for some reason or hesitated to pull the trigger. Many people have suffered steep losses during the recent market crash and cannot find the courage to invest in equities again. Sadly, once you are on the sidelines the path of least resistance is to continue doing nothing. The fear of losing money is a strong driver for people to just sit in cash and for some even to abandon the stock market altogether.

The most serious drawback of not participating is that without any skin in the game, interest inevitably wanes, which leads to throwing in the towel and falling off the trend following bandwagon. You stand to lose much more than just the return on the current signal: your mental commitment and discipline. We know that there are alternative investment strategies, but we also know that many have proven inferior or even outright dangerous over the long term. The more significant risk of dropping out, in our view, is the abandonment of a systematic and unemotional investment approach.

Mark Hulbert has frequently written about the consistency of long term winning systems, which despite temporary periods of underperformance are the more likely to return to leadership returns than not.

We urge you to reconsider your current wait and see attitude. For those thinking "this signal is almost four months old, it is too late to enter now so I will just wait until the next one", we luckily have the "dollar-cost averaging" method to reduce the risk of mid-signal entry and by far the best way to get with the program. For details on this technique read "Dollar Cost Averaging explained".

Of course we have a vested interest for you to stick with the program, but trust us to have your wealth building objectives first and foremost in our minds. Without them we do not exist. We know that achieving your financial goals critically depends on your continued and sustained participation in the market. Investing is not a spectator sport; you need to get your hands dirty to have a chance to win.

FAQ of the Week

Question: Should I trade after hours?

The TimingCube Model is run at the end of each trading day and, if a new signal is issued, it will be posted by 7:00 PM (ET), and some creative subscribers wonder if they could gain an edge by trading before the masses.

With the advent of computerized order matching systems known as electronic communications networks, such as Archipelago, buyers and sellers are electronically matched and trading can occur while the main stock exchanges are closed. Once restricted to professionals and institutions, extended hours trading is now offered by most brokers to their retail customers. Trading facilities are frequently available after hours from 4:00 PM (ET) to as late as 8:00 PM, and pre-market from 8:00 AM to 9:15 AM.

In addition to some restrictions on the type of trades (e.g. limit orders only) and generally higher commissions, some frequently listed risks of extended hours trading are lack of transparency, low liquidity, widened spreads, irregular trading, and a bigger chance for the inexperienced investors to get blindsided by the sharks that roam out there.

So the question remains: is there an advantage to trading before everyone else? We have not done an exhaustive study about this, but for a long-term index-oriented system that trades very little like ours, there does not seem to be any consistent benefit. The markets our subscribers invest in are so large that our humble signals have no noticeable effect whatsoever (and if we ever grow that large we will gladly cap our number of subscribers ). In fact, it looks like you are just as likely to get a worse price than that at the following market open, and without tangible evidence of a benefit we really cannot be strong supporters of extended hours trading.

Warm wishes and until next week.

The TimingCube Staff