MIPS
STOCK MARKET TIMING SERVICES
MIPS is a stock market timing model that sends signals to its members via email at the end of the days when the market (as measured by the S&P500) changes direction from up-to-down or down-to-up (Signal Date). The individual investor trades on this signal (LONG or SHORT or CASH) on the open of the market on the following day (Trade Date). Members then simply keep the position that they acquired on the trade date until the next Signal email from MIPS. It really is that simple. Click the "Signals Action" button to learn exactly what to do when you get a "Signal Change" email from one of the MIPS models.
MIPS Trading Profiles
This section explains how to select and trade with the MIPS models:
(1) which MIPS models to use,
(2) which stock market trading strategy to use (buy/hold, buy/short, buy/cash), and
(3) which equities (or ETFs) to trade.
TRADING FREQUENCIES FOR INDIVIDUAL INVESTORS
Stock market trading can be VERY complex or very simply depending on how investors elect to trade. At MIPS, we stay in the low-to-medium frequency trading range, and leave high frequency trading to the pros. Timing models that do venture into higher frequency trading usually create more work for their clients and can get chewed up by the pros. As can be seen in the table below, the MIPS models fit into the trading profiles on the left side.
MIPS MARKET TIMING MODELS
AVERAGE TRADING FREQUENCIES FOR THE MIPS MODES
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The MIPS models were designed and developed to be medium-frequency stock market trading models with a buy/short/cash strategy, trading ETFs on the next day's Open following each MIPS signal.
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We recommend using MIPS4/MF+ because it is a later model that contains more predictive algorithms.
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MIPS4/MF+
Our "flagship" model is MIPS4/MF+, which is a slightly faster trading model than MIPS3/MF.
- MIPS4 is an offshoot of MIPS3, but uses algorithms from all MIPS models.
- MIPS4 is more "predictive" than the other MIPS models.
- MIPS4's results are also very "smooth".
For this reason, we feel comfortable using the MIPS4/MF+ signals to trade leveraged ETFs.
- See our presentation on using leverage below.
MIPS3/MF
Our "Core" model, MIPS3/MF was introduced to the public in Nov. 2005. The "core" algorithms in MIPS3/MF include applied mathematics, pattern recognition, artificial intelligence (self correcting), and common sense to identify changes in direction in the market (Inflexion Points) and possibly a new intermediate-term trend (hence our name Market Inflexion Point Signals or MIPS). This model trades an "average" of 12-15 trades/year, but with a range of 5-20 trades/year in any given year. The "core" algorithms in MIPS3/MF are in all of the other MIPS models, except MIPS1/VLF.
We realize that there are many investors who do not want to (or can't) trade as often as a medium-frequency model requires. So, we offer another model that could be more appealing to these investors. Our other model is the low-frequency trading model (MIPS2/LF) which trades an average of about 6 times/year.
MIPS2/LF
Our low-frequency stock market trading model was developed for investors who do not want to (or can't) make over 5-6 trades/year. MIPS2/LF trades an average of 6 trades/year (but occasionally can trade 2-3 times in any one month). When coupling MIPS2/LF with a buy/short strategy, it will produce good results, but not quite as good as MIPS3 or MIPS4. Over time, the MIPS2/LF low frequency trading service should produce results that are at least 65% as good as the MIPS3/LF model (but 2-3 times better than buy-and-hold), with only 1/2 as many trades.
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WHAT TO TRADE
About 70-80% of the effort in making money in the stock market is in determining whether "the market" is "trending" up or down. In MIPS terminology, by "the market, we mean S&P 500 Index (which accounts for about 85% of the money in the New York stock exchange). Almost everyone makes money in a up market and vice-versa for a down market.
The MIPS models determine "the market trend" for us with an accuracy of about 65-70%. In addition, the gains from MIPS's winning trades are about 3 times bigger than the losses from losing trades.
Viable Trading Strategies Include:
MIPS works well trading the S&P 500 ETF (SPY) and most stocks or indices ETF that "correlates" well with the SPY. Most small-cap, mid-cap and large-cap US indices are well-correlated to the SPY (like the Russell 2000, the Nasdaq 100, etc). In general, even though these other indices track well with the SPY, their "volatility" is higher than that of the SPY (goes higher than the SPY in up markets and goes lower in down markets). Of course, this is great on MIPS' winning calls, but it is not good on losing calls. Correlates => http://www.investopedia.com/terms/c/correlation.asp
For more aggressive investors, we recommend 1.5 leverage SPY on long signals and 1.0x SPY on short signals. One can do this by trading 50% each of SPY and SSO on long signals and 100% SH on short signals. See right-most trading profile below...
Click here for a full definiton of "Shorting" or "Going Short"...
We do not recommend using "Inverse Funds" to go Short in high volatility markets (better to Short the Index itself) !!!
"Inverse Funds" http://www.investopedia.com/terms/i/inverse-etf.asp
SAMPLE:
MIPS3 (SPY Red)
MIPS3 trading IWM (Blue) and QQQ (Green) and SPY (Gold) since 2007
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MIPS "Signal" Distribution and Members' Trading Process
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I. The MIPS Models issue new Signals and emails are sent to MIPS members, such as:
II. Members decide which ETFs to Trade:
Trading Long Short Cash
ETF Long/Short Buy SPY* Short SPY* 100% Cash, or
ETF Long/Inverse Buy SPY* Buy SH* 100% Cash
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*Trade the ETF(s) of your choice following the advice in "What to Trade" in the section immediately above.
III. Here is what to do when you get a new MIPS "Signal Change" email:
1) Buy Signal:
- if you are in cash, buy the ETFs of your choice, but
- if you are short, "cover" your short position and then buy
the ETFs of your choice
2) Short Signal:
- if you are in cash, short the ETFs of your choice (or buy the
inverse ETFs), but
- if you are long, sell your long positions and short the ETFs that
you choose (or buy the inverse ETFs).
3) Cash Signal:
- if you are long, sell your positions and stay in cash, but
- if you are short, then "cover" your short position and stay in
cash.
IV. When to trade a new Signal
Timing systems send out trade signals every time their models change positions (long/short/ash).
- in all cases, the trade is to be made by its members on the very next opportunity.
MIPS is an end-of-day (EOD) timing system
- "Signal Change" emails go out after the market close each day that MIPS issues a new trade.
98% of these emails are sent between 5pm-midnight EST time on the day of the signal change:
- upon receipt of these MIPS emails, the very next opportunity to trade is on the next day's open
In the 1-2% of times when signal change emails are sent between midnight-9am eastern time:
- the very next opportunity to trade is on the that day's open.
And in the extremely rare times when MIPS signals are sent intraday, MIPS members are to:
- trade as soon as possible after receipt of the email (that intraday or on next day's open).
Weekends
On weekends, new trade signals emails may be sent anytime after the market close on Friday until
before the market opon on Monday.
- regardless of when a signal change email is sent over the weekend, the trade is to be made on
Monday's open (because Monday's open is always the first opportunity to trade a new signal
issued after the close on Friday).
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Strategic and Higher-Frequency Trading
Active traders can see more aggressive trading strategies by clicking below
- hedgeing; trading double/triple leverage; trading high monementum stocks;
trading hottest SP500 sectors; trading options, futures, etc.
Click here ==> Alternate Trading
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