Our Trend Model: How We Measure Our Own Performance

Our trend model is meant to be a straightforward and quantifiable means to track the performance of the trading/investment ideas and market calls that appear in our research reports.  It is basically a two-step process that is designed to be strategic to the quarter (the “intermediate term”) and tactical to the month (the “near term”).

In the first step, we analyze a comprehensive list of environmental inputs (including intermarket relationships, investor sentiment, and relative performance) to forecast upcoming market direction 1-2 quarters in advance.  In the second step, an objective price-based metric identifies changes in the monthly trend which generates the entry and exit points within that larger intermediate term forecast.

Our trend model was not designed to pick market tops and bottoms, because of the additional risk involved in doing so, but rather to participate in every intermediate term trend that the market gives us within a calendar year. Specifically, we are trying to capture “the middle 70%” of every intermediate term price trend, while avoiding the tops and bottoms, as we believe that this is the most reliable and risk-averse way to consistently beat the market.

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