Major averages rallied on higher volume yesterday as markets were satisfied the Fed lowered monthly bond purchases to $35 billion from $45 billion while pledging to keep rates an unusually low level for a prolonged period. Since January 2013, the S&P 500 has shown a strong uptrend with corrections contained to typically around 6% or less, but nevertheless just large enough to send investors and market timers to the sidelines as leading stocks in the S&P 500, NASDAQ Composite, and Russell 2000 would get pummeled typically 2 to 4 times the contained fall in the major averages.

Since January 2013, buy & hold has well outperformed trend following and market timing for the first time in decades leaving many to ask whether trend following is dead. This question, as many well know, has been asked a number of times during the last century, only to see buy & hold end its short reign as trend following maintains is superiority as witnessed by the long term track records held by trend following wizards interviewed in various books including the Market Wizards series by Jack Schwager and the book "Trend Following" by Michael Covel.

In recent times, the track record of the trend following wizards remains poor since quantitative easing began a few years ago. Such artificial manipulation of markets throws many formerly reliable indicators out the window. The Market Direction Model has accounted for material changes in the markets due to such manipulations. It made material adjustments in early 2009 which accounted for its superior performance over other timing systems until 2012. In early 2014, it made another material change which accounts for its recent ability to rejoin the trend earlier than it normally would, thus it's latest signal has been reminiscent of earlier performance periods. UVXY model has also had material changes made and its current signal is profitable to nearly 40%. That said, some members may decide to trade around a core position by taking some profits off the table.

Amazon.com (AMZN) unveiled its Fire phone yesterday, leading to a bottom-fishing pocket pivot off of the 10-day moving average. This is the second such pocket pivot in the pattern in June and since the lows of early May. The action is also typical of many resurging leaders, from NFLX to QIHU to YELP and FB.