20110108 Timer Commentary

A new build of the market timing models has been released this weekend. Although the backtested graph will make the previous year of the Mountaineer look much better, the recorded TimerTrac history will still maintain the real-life performance. New site visitors should review the historical performance of the models in the Performance section of the website.

While it would be true that the average annual performance for the past two years has been great, it would tend to gloss over the idea that a stellar 2009 was followed by a poor 2010. There is always a desire to make instant changes to tweak the models but being rushed sometimes makes things worse.

We have come to understand the Federal Reserve’s POMO and TOMO activity has over-ridden normal market behavior, and that many historical correlations have been temporarily overwhelmed. This will end badly at some point. Don’t be the last one in the water when things unwind.

The changes to the models did not require any specialized or new data to be brought in for calculations. We believe this solution provides a better generalized result that can apply to other market surprises. Indeed, the downturn in the Climber model in 2002 which has persisted over all builds finally showed improvement with this build of the market timing models.

In May of 2010, we disclosed that we would be using the Climber for our personal trading strategy. With the new build, we are going back to using the Mountaineer model for our own market timing.