Yesterday I pointed out that collectively,
the folks who trade a couple of the Rydex 2x funds that I track were only right
48% of the time. In other words, when
more money was invested in the long funds at the close of any given day
(betting that the next day would be up - and vice versa), those investors were
right less than ½ the time. That’s a
recipe for losing money.
I have wondered whether the NTSM system would
do any better on a daily basis. The NTMS
system was designed to identify tops and bottoms so I didn’t expect too much.
I looked at the output of the NTSM system for
every day in 2011. If NTSM was Buy and
the market went up the next day I credited it with a correct result. If NTSM
was Sell and the next day was down, I also credited the system with a correct
answer. A Hold got no credit.
The results are in - the NTSM system was
correct 53% of the time for 2011 on a daily basis. That’s better than a coin flip, but only
slightly better, so I don’t think I will try to use the NTSM system for day
trading. The daily Buy, Sell, or Hold output
gives a general indication of the market condition and while that was generally
true, there were two instances in 2011 when the NTSM system changed from Buy to
Sell (or vice versa) in 3-days.
The
NTSM analysis is BUY today.
I
bought back into the stock market at S&P 500, 1155 on 7 Oct after the 6 Oct
NTSM buy signal. I remain 100% long in
the long term portfolio (100% stocks in the 401k.). (See the page “How to Use
the NTSM System” – the link is on the right side of this page).
I
am 90% long in the trading portfolio.
Just a reminder: 100% invested in stocks is way too much for most rational folks. Don’t do it unless you have a high tolerance for risk.
