We have been reporting our changes in market outlook, although this policy might change at some point. Many bloggers keep their positions secret.
Our vote last week moved to neutral, from the bullish call we initiated on April 9th. Since the opening on that date, Diamonds Trust, Series 1 (DIA) has gained 6.7%, SPY 4.1%, and PowerShares QQQ Trust, Series 1 (QQQQ) 5.1%.
Basis for Intermediate Forecasts
Our intermediate forecast is based upon work by our chief modeler, Vince Castelli. One of his models generates signals on individual stocks as well as ETFs and market indices. The (over-simplified) description of the model is that it captures both trend-following and cyclical characteristics using his proprietary technical criteria.
How We Use This
The intermediate signal influences the overall asset allocation of our managed funds, including the capacity for significant hedging and short positions.
For long-term investors, we make marginal position adjustments with the intermediate outlook in mind.
It does not change our fundamental analysis, including our expectation for a strong second half in 2007.
Not a Recommendation
Signals like our intermediate call are often "choppy." It is not unusual to see the signal make weekly changes at key points. Many individual investors make mistakes by trying to time the market.
While market timing can be profitable, it requires a good method and constant attention.
Whatever one's approach, it pays to be flexible and respond to new information in an objective way.