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Jeff Diercks
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Jeff Diercks, is an investapreneur and recovering CPA. He actively trades his own money and manages the assets of a select group of clients at InTrust Advisors, a Tampa, Florida based wealth management firm focused on trend following and price momentum strategies utilizing ETF securities. Mr.... More
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  • What Do I Do First?

    We have had a number of new subscribers email me in recent weeks and ask "what do I do first?" I have of course happily provided guidance via email, but I thought I might quickly cover in this week's blog post how to quickly get up to speed and use When I get time I will amend this information and turn it into a how to get started ebook as well.

    So let's start with the basics for anyone that is not already a subscriber. provides signals on when to buy and when to sell on any one or all of the seven indexes we offer signals.

    We offer signals on the Nasdaq, S&P 500, high yield, EAFE, gold, DB Commodity, and U.S. Dollar indexes.

    So as a new subscriber (or under a 30 day trial), your first order of business is determine how to use Here are some common ways:

    1. Just for the S&P 500 signals to time your 401k or other accounts between bull and bear markets;
    2. To build a diversified portfolio of some or all of these seven indexes (see our members area and our sample portfolios for ideas). I report on two such sample portfolios every month when I post performance for the index signals.
    3. To use the signals as a hedge for another portfolio. This hedge, unlike options or collars, makes you money as markets move higher and hedges if markets enter a protracted downward phase.
    4. To help in making allocation decision for others without really trading any of our indexes. This is how several registered investment advisors use

    I am sure there are few more ways to use our signals, but these are the main ones.

    So like I said, your first question is "how do I want to use"

    Next, and let's assume for the sake of this post, you decide to build a simple portfolio of equal weight positions in the S&P 500, Nasdaq, EAFE and High Yield Indexes. So log into our member's area home page and you should see this:

    These seven boxes highlight our current signals at any point in time.

    So if you are looking to build your simple equal weight portfolio, you would buy ETFs or mutual funds (see our member's area list of ETFs or mutual funds) that go up when markets go up (we call this being "long" or "long funds") for the Nasdaq, S&P 500 and High Yield Indexes because they have "Buy" signals above.

    You can use any self directed brokerage or IRA account to do this trade such as Schwab, Fidelity, Interactive Brokers and so on.

    You might use the following ETFs tickers as an example (QQQ x 25%, SPY x 25% and HYG x 25%).

    So now what about the EAFE Index which has a "Sell" signal? Well this signal indicates that we should either be in cash for this piece of the allocation, in an ETF or mutual fund that rises as that index declines (called inverse funds) or in a margin account you could even be short the long ETF (e.g. short EFA).

    In our case, we are going to use an inverse ETF for the EAFE Index. You might pick EFZ and just like the other ETFs buy a 25% position.

    So now you are invested with the signals and you just wait. Wait for the next signal to arrive via email or be confirmed in our weekly signal wrap up and technical review.

    That signal looks like this:

    When you get the signal please execute the trades to move out of your current position and into a position that fits the new signal. This can be done when you get the signal or on the next trading day.

    So I hope this has helped. Our member's area also has a number of video tutorials that cover how to buy or sell and general tours of the site. Of course, feel free to reach out to me if you have further questions.

    Tags: QQQ, SPY, HYG, EFZ
    Mar 09 2:45 PM | Link | Comment!
  • Performance For February 2014

    In February, the markets staged a "V" shaped recovery from the January correction lows. This kind of accelerated recovery on declining volume used to be quite rare, but it seems more the order of the day today.

    For trend followers, like, this kind of market action is the kiss of death! Why? Because just as our models are shifting buy to a sell following the declines, Mr. Market puts it in overdrive in the opposite direction. This then requires time for our models to adjust again while we are usually sitting on the wrong side of the trade and losing money.

    Luckily for us, the January damage was shallow enough that we did not get hurt too bad on the equity indexes, but we did get hurt on the alternative indexes (more on that later).

    So here is how the month finished for the broader equity indexes:

    Now before you get all giddy, let me burst your bubble a bit by looking under the hood of this past month's performance.

    First, these big gains for the most part just offset losses in January and most market averages are just above flat for the year. With Monday's sell off, we are probably back to flat or negative for the year depending on the index.

    Second, the whole move (see below) up off the lows was on lower volume. This my friends is not typically a good sign.

    Third, Monday's negative price action if it holds will reverse the Friday breakout. Please note that the above chart was printed at around 1:49 pm and its Friday volume is not complete.

    Fourth, leadership was primarily in defensive sectors. Again, if this bull market is to continue it must be lead by the financials, technology and consumer discretionary sectors, not the defensive sectors.

    Now I will be the first to admit that this rotation is far from conclusive, but it bears watching!

    Fifth, there was a lot of volatility inter and intra day and a lot of reading the tea leaves about future Central Bank involvement. I think Les Jepson got it right in a recent YouTube video post entitled Bonds Reveal A Darker Federal Reserve Plan that a bear market is coming and it has must come for the U.S. Government to have a ready source of buyers for its treasury bonds.

    Who else will buy them if markets keep heading higher? However, if markets start to move lower, a natural flight to safety (perceived safety!) creates natural bond buying interest. This makes perfect sense to me!

    Professionals are seeing that the Central Bank is backing off and that is why we see the rotation to defensive sectors of the market starting to occur!

    Finally, we are running out of real estate. Check out the monthly chart of the S&P 500 Index.

    The S&P 500 is in a rising wedge pattern, which is ultimately a bearish pattern, and it is running out of real estate. This usually means something must happen. What usually happens with this pattern is a break to the downside.

    Also check out the chart of the EAFE vs. the U.S. S&P 500 Index in my post entitled U.S. or Foreign Markets: Which Is A Better Bet? This even gets scarier if you take a look at the pattern the daily EAFE index is putting in (see below).

    This pattern is called a broadening pattern. You typically see it in charts where the underlying security is about to come under great pressure. Think of it as a car wheel about to come off its axle. Not a good thing! Performance

    So why did I give you such a detailed list of reasons this market is about ready to move and move down. So that you will understand one thing, trend followers do poorly on the turn in markets or stocks (tops or bottoms). At tops, we give back returns until our models give us the next signal in the opposite direction. At bottoms, we give back short side gains while we wait for confirmation to go long again.

    Tops are traditionally choppier and last longer than bottoms and we tend to get bounced around some. That has been the case the past few months in several indexes.

    I cannot tell you for sure, but this market has the feel of one about ready to change direction. Our returns in the EAFE, Gold, DB Commodity and Dollar indexes reflect this uncertainty as you can see below. Not a pretty picture overall!

    However, I want to remind you that if the market is indeed transitioning, that means the mother of all trends is about to start. So lick your chops and start to get excited because if I am right, this is the market we have been waiting for!

    2014 Market Forecast

    I am not going to rehash it again here. Just read the commentary above.

    I will go on record with this prediction, the next bear market will start this year. However, I believe the real fun will not come till 2015 in terms of the next worldwide financial crisis.

    So strap on your big boy pants and get ready!

    Mar 03 1:08 PM | Link | Comment!
  • U.S. Or Foreign Markets: Which Is A Better Bet?

    They say that asset allocation is 90% of the overall return equation in investing. So wouldn't it make sense that if you knew just where the next hot market would be that you could increase these odds even more?

    I ran across this chart in my weekend stock review and thought I would share it with you.

    This chart is a relative performance chart of the U.S. (as represented by the S&P 500 Index) vs. the Foreign Markets (as represented by the MS EAFE Index). What is clear is that the relative performance chart is in a consolidation pattern.

    In fact, we call this pattern an "Ascending Triangle" pattern.

    According to, "in an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs." Which is exactly what we have here.

    Traders generally enter long positions when the price of the asset breaks above the top horizontal resistance line (see green arrow representing breakout price move). An ascending triangle is generally considered a continuation pattern.

    So in the chart above, one must conclude, assuming there is a breakout above the upper horizontal trend line, that 1) the S&P 500 looks like it could outperform the foreign markets on a relative basis due to continued rising markets in future months; 2) the S&P 500 looks primed to outperform foreign markets due to problems in overseas markets; or 3) on a relative basis the S&P 500 will outperform, but there could be problems in both markets.

    No matter which scenario you believe is possible. The fact of the matter is the odds seem to favor outperformance by the S&P 500 on a relative basis (assuming this consolidation does indeed act as a continuation pattern).

    What are your thoughts? What do you think is likely to happen?

    Feb 25 11:33 AM | Link | Comment!
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