“Being on the wrong side of the market is the worst thing that can happen to an investor. It doesn’t have to happen to you.”—Dr Bart DiLiddo
VectorVest has been measuring and reporting the direction of the stock market for over 20 years. There are several objective Market Timing Systems build into the VectorVest software. Short term systems for traders and longer term systems for position traders and investors. All of the systems are totally objective with no subjective input required.
Timing the Market: A Fail-Proof System
All of the systems are based on the VectorVest Composite of the entire UK market which comprises 2165 shares. The VectorVest Composite, (VVCUK), is the arithmetic average of the 2165 stocks in our database. When the Price of the VVC goes up, the market is going up, and when the Price of the VVC goes down the market is going down.
Our basic system of timing the market is described in Chapter 20 of Dr DiLiddo’s book “Stocks, Strategies & Common Sense.” You can click on this link and download the entire PDF file.
The longest-term Market Timing system is described below. These signals are known as Confirmed Calls and use the VVCUK in their calculation plus the proprietary Market Timing Indicator (MTI). The MTI is a momentum study of both the price of the VVCUK and the number of shares in the database on a Buy recommendation divided by those on a Sell recommendation. The latter is known as the Buy/Sell ratio (BSR). The MTI oscillates between o and 2.
A Confirmed Up (C/Up) signal is given when both of the following occur:
- The price of the VectorVest Composite UK (VVC/UK) has increased five-trading-day-period over five-trading-day-period, for two consecutive five-trading-day-periods.
- The price of the VVC/UK has increased from the prior day.
- The Market Timing Indicator (MTI) is greater than00.
A Confirmed Down (C/Dn) signal is given when both of the following occur:
- The price of the VectorVest Composite UK (VVC/UK) has decreased five-trading-day-period over five-trading-day-period, for two consecutive five-trading-day-periods.
- The price of the VVC/UK has decreased from the prior day.
- The Market Timing Indicator (MTI) is less than00.
Don’t Get Caught on the Wrong Side of the Market
There is a good and proper time to be buying shares and a lousy time to be buying shares. The Confirmed Signals tell the trader and investor exactly when to be active in the stock market. They are computed and displayed on the front page of VectorVest, on the chart of the VVCUK and can be overlaid on any single share chart. Using the VectorVest app on a smart phone, the direction of the market is with you wherever you go.
The chart below is the VVCUK. The green triangle are the Buy signals and the red triangles are the sell signals. Many traders won’t sell their shares after a red triangle but it’s certainly a sign not to buy any more. Here I what I do when I see a Confirmed Down:
Upon a Confirmed Down
- Don’t buy any more shares
- Watch stops much more carefully and resolve to follow them
- Consider selling a few laggards to raise cash for the next Confirmed Up which will come as certainly as day follows night.
I find the ability to overlay the Confirmed Call signals on any share exceptionally useful. Below is the chart of STOB.L. It’s a stock that I have featured on this blog a few days ago. STOB.L looks probable for a move when the overall market turns. The green and red triangles have nothing to do with STOB.L save that the share is one of the 2165 shares that make up the VVCUK. Note how the share moves with the market. That’s why at VectorVest, we believe that the most important thing to know is whether the market is moving up or down. Everything follows from that knowledge.
Let VectorVest keep you on the correct side of the market and invested in those shares which have the strongest combination of Value, Safety and Trend. This is all done in a few minutes a day.
For a five-week trial of VectorVest UK and USA, just click or tap here.
December 8th 2017