MDM - Model switches back to Neutral on November 11, 2011

Published : November 11 2011 at 11:04 ET

The NASDAQ Composite breached the high it set on the day of the 5th distribution day, thus the model moves back to cash. Note, that such rules are not set in stone as they are contextual to the overall market environment. In the present case, with all the volatile noise in these news driven markets, it is best to activate the fail-safe sooner than later. Pyramiding into ETFs keeps losses to a minimum in addition to the fail-safe when a signal proves false during these challenging markets.

It is never easy to have a number of false signals in a row, and the model had its share earlier this year, then more than made up for the small losses with big gains in August and September, as per the rhythm of the model as shown here:

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