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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 692.27

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4:00 PM EST

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To: Tom Pulley who wrote (83653)	2/1/2003 12:40:41 PM
From: Tom Pulley	Read Replies (4) of 99985

This year I'm going to try to post the timing model results monthly. In January, the model was up 8.3% versus 0.3 % for the qqq which I trade. The actual trades are shown below with the hypothetical account starting the year back at $100,000: - Started year at 50% long with QQQ at $24.37: 2052 QQQ, $49,983 Cash - Jan 15 went to 25% short at $27.29: Short 971 QQQ, $79,463 cash. - Jan 28 went to 50% long at $24.80: long 2185 QQQ, $54, 180 cash - Jan 31 went to 100% long at $24.12: long 4431 QQQ Although I am 100% long, I would not be at all surprised to see the market go lower before it turns back up. A number of indicators are not really showing to be fully oversold yet at this point. For instance, I like to watch the stochastics on the VIX and often it gets to 80 or higher at good buying opportunities. Currently it is clearly trending up (as expected with the market trending down) and it is at 58 with another couple of weeks before it could hit 80. But although I don't have much conviction personally this time that the market will be heading up from here, I've learned that my returns are better if I don't try to second guess my timing model. Typically even the losing trades don't lose much on a percentage basis and I don't want to miss a big winning trade. Tom

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