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Market Timing

Monday, November 02 2020
MIPS provides its Subscribers very straight forward direction as to whether you should be invested in the market (Long), or out the market (Cash), or betting against the market (Short).  As a MIPS member you should follow the MIPS signals as issued.
But that is not the complete story.
At one time in the past, we reported how close we thought MIPS was to a signal change by what % of MIPS indicators were Long and what % were short. But, that was misused.  Using this, many of our Members tried to jump a few days ahead of the actual MIPS signals whenever they thought it was a good time to be Long or Short.   But, of course, most of  the time the market elects to change direction on its own; or its direction it is stopped by a support or resistance level, and it reverses itself quickly. So, we were forced to stop providing that kind of info because it was basically tempting our clients into trying to get ahead of the next signal; and of course, they failed.

But there is one investment strategy that MIPS (and to my knowledge, no other retail timing model) never attempts to manage, and that is your "Risk Management".  In order to know how to manage your risk, one would need to know your personal "Risk Tolerance", and of course, we do not know it.  Risk Tolerance could be as simple as how large of a loss of capital that you can tolerate without panicking.  Even though MIPS is programmed a little more for "Preservation of Capital" than for "Shooting for the Moon" in performance, good Risk Management is not possible without knowing the risk tolerance of each subscriber. That is not possible in my business.  Some professional money managers or RIAs (that require a minimum investment amount of $200,000-300,000 along with fees somewhere between 1.5% - 2.5% per year), may spend some personal time with you and may try to design a portfolio to meet your personal risk tolerance, but many of them fail to meet that goal.

My point is that, if you are going to manage your money yourself with trade signals from models developers like MIPS, you will need to help yourself a little with a few things that are easy and entirely under your control. The two that come to mind are:
   (A) you decide what Index you will trade, and
   (B) you decide what % of your money you want to be invested in stocks at any and all times.

A) MIPS is designed to work well trading the S&P 500 (SPY, IVV, VOO);  mainly tech stocks (QQQ, ONEQ); the Dow (DIA);  and mid-caps (IWM).
     For example:
     Under normal conditions, I trade SPY;
     - when the market is moving up somewhat steadily (like 2017), I trade QQQ; 
     - or in-between these top two, I may trade 50% SPY and 50% QQQ;
     - and, when I feel that I need more safety, I trade DIA
     I may leverage on Long Signals up to 1.5x, but I never leverage on Short signals
     - if you are not sure what to trade, trade the SPY (with no leverage)

B) Under somewhat normal conditions, I invest 100% of my investment money in equities (stocks).  In highly volatile markets (like Feb and March 2020), I may only trade
     with 70% of my money in equities and 30% in cash,   And, at this time, with high uncertainty in the election, I am 50% in equities and 50% in Cash (until after the election).
     - in other words, at this time I am willing to give up some performance on the upside to protect my money on the downside
     - on the other side, some of my best friends and clients are fully invested
     - the bottom line is that there is no right of wrong across the board, as it is all about how well you allocate your participation in the market to your personal risk tolerance.

So, you should use MIPS signals, but you need to help manage your own "Investment Risk"
     - should not be difficult, manly common sense.


All of the MIPS models are still Long. They are very close to a signal change (Cash or Short), but this could change in single day.
Also, the models are very close to a "Stop Loss Trade"; but that can also melt away like snow in hell.
That is why we need to wait for the exact signal from MIPS.

Happy Trading !!!

Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
Houston, TX
281-251-MIPS (6477)
Posted by: Dr. G. Paul Distefano AT 01:45 pm   |  Permalink   |  Email
Sunday, October 18 2020
Several MIPS members have asked me to show detailed performance of the MIPS models since June, 2000
- this may have been motivated by the fact that our last signal was June 6, 2020 (see graph below)

Graph 1 - so far, the signal on June 26th has been very successful, and no new signals have been issued by any of the MIPS models since then
- MIPS does not trade just to trade; it trades when it's quantitative computer program calculates and forecasts that we need to go Long, or to go Short, or to go Cash

Graph 2 - Note that MIPS avoided most of "the crash" in 1Q'2020
- note that the MIPS models do trade more often in volatile markets (as they were designed to do)
And remember, you can trade the DIA or SPY or QQQ with MIPS signals (your choice)
- see =>
BTW - when in doubt, just trade the SPY (it's the safest), whereas QQQ is the most aggressive

Graph 1 - MIPS/Nitro55 Graph (since June 8th)
Blue    - Nitro trading QQQ
Green - Nitro trading SPY
Red    - Dow Index (DIA) Benchmark

From (red dots represent trade dates)

Graph 2 - MIPS/Nitro55  Graph (for the last 12 months)
Blue    - Nitro trading QQQ
Green - Nitro trading SPY
Red     - Dow Index (DIA) Benchmark

(red dots represent trade dates)
- MIPS avoided about 50% of the "big crash" of -33%, which bottomed on March 23rd

--- Contact Info ---
Paul Distefano, PhD
MIPS Timing Systems, LLC
Houston, TX
Posted by: Dr. G. Paul Distefano AT 06:20 pm   |  Permalink   |  Email
Sunday, October 04 2020
The graph below shows the performance of the MIPS/Nitro model in the last 12 months...
- Not too bad for this crazy market, but we could have been better
- In fact, had we had the last release of MIPS earlier in 2020, we would have done much better
- And, a little leverage on Long signals (like 1.25x or 1.5x) would have been a big help

Your trading choices with the MIPS models is explained briefly under the link below (or call us with questions)
Blue    - QQQ with no everage
Red     - SPY Index ETF
Green - SPY with no leverage

Paul Distefano
Posted by: Dr. G. Paul Distefano AT 05:51 pm   |  Permalink   |  Email
Monday, September 21 2020
Look at the extreme right in the graph below.  Today the market bounced off of a very strict support level (200-Day Exp Moving Average) and closed way above its bottom.
This pattern is called a "One-Day Key Reversal" and it usually turns into a change in direction. In our case today, that would mean that the market starts back up (at least
for a while. 

Time will tell.  All MIPS models are Long at this time.

Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems
Posted by: Dr. G. Paul Distefano AT 09:57 pm   |  Permalink   |  Email
Monday, August 24 2020
The S&P 500 Index (and the SPY) broke above their All-Time High (ATH) last week (graph below). From here, we can expect more upside; but this market is now way overbought by just a handful of high tech stocks like the so-called FAANNG (Facebook, Apple, Amazon, Nevida, NetFlex, Google), Microsoft, TESLA, and 10-20 others. The markets are in a situation where a relative few stocks in the indices (less than 20%) are valued above all of the other 80% combined.  One day, investors will realize that this move upward has run out of steam, and a pull-back (or even a correction) will happen soon thereafter.  When?  Well we need to rely on MIPS to tell us when we should remain Long and when to "Get Out".

Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
Houston, TX
Posted by: Dr. G. Paul Distefano AT 12:34 am   |  Permalink   |  Email
Monday, August 17 2020

See the graph below. On the top right, you will see that the SPY has been within "breaking distance" (less than 1.5%) of its all-time high (ATH) for the last 5 trading days. Normally, the longer it takes the SPY to break above its ATH, the stronger the break to the upside will be. 

 As always though, if the SPY fails to break above its all-time after like over 10-12 days, it could head south at a rapid pace into "correction" territory. There are times, however, when the SPY breaks above and below its ATH a few times before it makes up its mind on which way to go for the long term.

This is a very complicated period in the market, so we should wait until MIPS tells us what to do next.!!!
- MIPS is still long and strong at this time...
Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
408-234-8348 (Cell)
Posted by: Dr. G. Paul Distefano AT 09:49 pm   |  Permalink   |  Email
Thursday, August 06 2020
In a previous Blog (see "Previous Blog" below), we showed "The Gap" that the market (S&P 500) would have to go through to reach new highs.  In the graph immediately below, we can see that the SPY did just that in short order this week as it broke out of "The Gap" to the upside today. Now, the SP 500 is only about 1.5% from its all time high.   Read on...

I think the big question now is "where will the market go from here in the short-term if it moves into new all time high territory?"  Usually when markets approach new highs from a big distance below, they "stall" and test above and below the old new high for several weeks.  Even considering the above, at this time, there is nothing to stand in the way of the market plowing through at the rate that it has been going. 

As we all must know by now, almost all of the recent upside movement in the market has come from less than 10% of the total stocks in the SPY and QQQ.  And, a large portion of these has come  from the FAANG stocks, Microsoft, and a few more (FB, AAPL, AMZN, NVDA, NFLX, GOOG, MSFT, and a handful more).  Of course, these stocks are now way overbought, and any disturbance here now could start a major sell-off and correction.

And remember, quantitative models classify markets as Up or Down by its movements, momentum, trends, etc and they DO
NOT need to know (or analyze) why. Quantitative models predict market directions from market movements, applied mathematics, predictive analytics, artificial intelligence, etc (and not solely from earnings, debt, PE ratios, etc).

MIPS is most valuable in markets like this by keeping us Long while the market is still going up, and getting us into Cash (or Short) if and when the market is falling.

Good trading...
Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
Posted by: Dr. G. Paul Distefano AT 09:49 pm   |  Permalink   |  Email
Saturday, July 25 2020
As most of you know there are probably over 50 popular "Patterns" that investors use to forecast which direction the
market may be going. These patterns go back to over 50-70 years ago, when quantitative investors searched many past
years to identify certain patterns that seemed to (a) repeat themselves, and (b) have a high probability of an accurate
forecast going forward.  Most of these were published in the news or on the Internet, and many investors follow them
with high confidence.  A few of the most popular patterns are  "double tops/double bottoms",  "golden cross/death cross",
"MACD",  "Moving Average Crossovers" ,  "Flags" , etc.   

A lot of these were published many years ago and were confirmed by data back 20-50 years from that time.  The problem 
with this is that the market behavior in the past (50-70 years ago) has changed dramatically, so some of these are 
completely obsolete.  If so, then why do people still use them.  My belief is that, if enough of "today's investors" believe that
these patterns will accurately predict what they claim, the buy/sell action from these "today's investors" will force the pattern
to behave as promoted.  In other words, they perform as a  "self-fulfilling prophecy".

Even if a self-fulfilling prophecy is the reason, we still need to pay attention to the results to help us understand what results
the current massive buying/selling in the market will cause.

So, where are we now (see the graph below, using Vanguard's VOO for the S&P 500/SPY):
- See the big "GAP" in the SPY between 2/21/29 (Friday close) and 2/24/2020 (Monday close)
- investors don't like an "empty" GAP, so it can act like very strong upside resistance now
- As you can see below, the SPY recently broke upward into the GAP territory, but failed to top it and dropped back down
- Most likely the market will try at least one more time to break above the GAP and head to a new All Time High (ATH)
- But, the ATH will probably behave as a strong resistance to the market climbing above it.

There is a strong possibility that, if the market does not break into "new high" territory in the next few weeks/months, and if the
economy does not show some attractive growth by then, this will basically lead to a real bear market (a drop of 25-50%) !!!

MIPS is still long, so let's wait for MIPS to tell what to do next...

- don't be afraid of a bear market, because MIPS performs well in down-moving markets...

Good Trading...

Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
Houston, TX
408-234-8345 (cell)
Posted by: Dr. G. Paul Distefano AT 04:22 pm   |  Permalink   |  Email
Sunday, July 12 2020


THE RESULTS ARE TERRIFIC (you will most likely not find a better model)


See complete list of new Fact Sheets at =>

All Fact Sheets start with a $10,000 Investment


Posted by: Dr. G. Paul Distefano AT 10:26 pm   |  Permalink   |  Email
Tuesday, June 23 2020

The stock market of 2020 has wreaked havoc on millions of investors.  And, it has put a big dent in many retirement accounts.  Most investors feel and believe that the worst is over, but is it?.  

First, please understand that many market "crashes" are quickly followed by bear market rallies (aka "Sucker Rallies"). They are called Sucker Rallies because about 60-65% of the time "the rally" runs out of steam and the market turns down into a 2nd leg of the original "crash" that is even more devastating than the 1st leg down.  However, professional investors have determined that in the past, if the rally recovers over 50% of the 1st leg down, in most cases the "crash" has bottomed.  That appears to be what has happened now, but maybe not.

In the graph below, you can see that the market (the SP 500) bottomed out after a 34% drop (1st leg down), recovered 50% of this drop about 3 weeks later, spent 24 days trying to break above the 200-Day EMA, and since then has spent the last 5 weeks working its way to "New High" territory.  If the SPY makes it to the New High territory, it will be quite a battle there between the Bulls and Bears.
The real question on my mind is "Is the market going to make it to the New High territory or tumble back down somewhere along the way"?.
Read on...

This time is different (yeah, right) because we are in the middle of a virus pandemic and the government has approved trillions of dollars in distributions to individuals and US businesses. And, even much more, the Fed has promised "no limits" in loans, buying bonds, and indirectly buying stocks. To date, the Fed has pumped trillions into the economy. This, of course, has been the main catalyst in the up moving markets (very abnormal).  This cannot continue, so what's next?.

At this time, we are aware of and reading about multiple brick walls along the way up that could completely reverse this market growth into a very fast acting "free-fall' down".  This includes the directions of the virus, ups-and-downs in employment, corporate financial numbers, and what the Fed does next.

Another very surprising example of what the market will soon face is nicely outlined in the following article from CNBC entitled:
 "There’s a wave of selling estimated to be in the billions that’s about to hit the stock market"     Click on =>

Please read at least part of the above and be conservative with your money (like only investing 50-65% until this blows over).

Good News !!!
 On 5/18/2020, we released our new version of all the MIPS models to accommodate:
   - "fast acting markets", and
   - "high volatility markets"
Our tests show that the new versions perform twice as good as the recent versions that we replaced (more later) !!!
PS - MIPS users do not have to do anything different (just follow signals from the model that you have been following).

Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
Houston, TX
408-234-8348 (my cell)
Posted by: Dr. G. Paul Distefano AT 10:29 pm   |  Permalink   |  Email

MIPS Timing Systems
P.O. Box 925214
Houston, TX  77292

An affordable and efficient stock market timing tool. Contact MIPS
281-251-MIPS (6477)