by TradingLogix

Our overall investment strategy is to be long when the market is advancing and in cash when it is declining. It is possible to short the market when it is declining and improve returns, but the results shown here do not require short sales. To go long, we buy Exchange Traded Funds (ETFs) that track the various indexes. This provides excellent diversification and an easy way to get in and out of the market. Had you simply invested in the the SPDRS S&P 500 (Symbol: SPY) using our reversal signals, you would have beat beat the market by a significant margin. We call this our "Standard" portfolio. However, since we attempt to be in cash during down markets we prefer to use an ETF that targets 2x the gains and losses of the market, such as the ProShares Ultra S&P 500 (Symbol: SSO), so that we can make the most of each market advance. We refer to using these 2x ETFs as "Ultra" portfolios.

Our Market ForesightSM reversal signals, which are based on a mathematical model, determine if we are long or in cash. For the purposes of the 15 Year Performance Test, we buy when the model shows a bullish reversal to the upside, then hold that position until the model generates a bearish reversal signal, and then we go to cash. It's that simple. No charts to interpret. No judgements to make.

The 15 year period from 1996 through 2010 was an extremely difficult market for investors. This period had two economic melt-downs including the post Y2K market collapse and the 2007-2008 financial crisis. Our view is that any indicator or system must be able to weather these difficult markets because they are now part of our economic reality.

The average annual return generated from this 15 year performance test using our S&P 500 Ultra portfolio was 19.0%. In contrast, simply buying and holding the S&P 500 would have only yielded a 4.9% annual return. The systems highest annual return was 60.1% and the lowest was -12.1%. Exiting the market based on a sell signal dramatically reduced the number of loss years over a buy and hold strategy. There were only 2 loss years expereinced during the 15 year performance test, and the losses were relatively modest compared to the returns generated during the other periods.

You can also use our Market ForesightSM approach to invest in the NASDAQ and the Dow Jones Industrial Average (DJIA). We have also backtested the approach for these markets with very comparable results, which are summarized in the graph below.

The real power of this approach to investing is revealed when you see how these returns compound over time. The total return for the S&P 500 Ultra portfolio over the 15 year period was 1,263%. That compares to a relatively lackluster 105% from buying and holding the S&P 500 for the same period of time. During the first five years our strategy demonstrated a 376% return, 671% for the first 10 years and reached 1,239% at the end of the 15 year period. In contrast, buying and holding the S&P 500 made only 114% during the first 5 years, then lost money during the remaining 10 years.

If you like investing in technology stocks it is possible to do even better. Our 15 year performance test of our NASDAQ Ultra portfolio generated an average annual return of 23.1%. While this seems like a small increase in annual return, the effect of compounding yielded a total return of 2,262%.

Our Market ForesightSM 2.0 Market Reversal Newsletter service is designed to get you long when the market is going up and in cash when the market is going down. This subscription service consists of the following:

Reversal Warning Alterts flag ustable conditions in the market so that you can take precautions to protect your investments.

Market Reversal Signals show you when you should be buying and selling based on changes in market direction.

Current Position Indicator shows if you should be long or in cash, taking the guesswork out of investing.

Comprehensive Market Analysis provides insight into changing market technical developments.

Major Markets Included - Market ForesightSM provides this market direction and insight for the S&P 500, NASDAQ and DJIA, providing you a wide range of investment options.

Easy to Read Dashboard Format makes it simple to see what's happenning in the market at a glance. Delivered to your email address monthly.