Timing Models

The MTR-TM is a mechanical stock market timing model inspired by the 4% Model (some call this the 4% Indicator) written about by Martin Zweig in his book “Winning on Wall Street.” The original 4% model issued buy and sell signals based on a week over week (wow) (Friday vs. Friday) change in the Value Line Arithmetic Index.  If the index was up 4% wow buy (go long) or if the index was down -4% wow sell (and sell short). 

The issue with the original 4% Model is that it created many false or whip-saw signals.

The goal of MTR Investors Group was to take the 4% Model as the basis of a stock market timing system and figure out how it could be enhanced to create a better timing model. The MTR-TM represents well over a year of testing various strategies until we arrived at a timing model that can be used to time intermediate and long term stock market moves. The MTR-TM went live on March of 2009.

MTR-TM Returns:  Model statistics January 1997 to June 24, 2011. 

Note: We fully disclose the percentage of winning trades vs. the percentage of losing  trades as shown below. There are other timing models you will find online that discuss only the large returns gained with their system. They do not want to disclose the percentage of losing market calls since it will take away from the "Holy Grail" persona they are trying to keep up. If you have a membership with a site that issues market calls compare the signals to MTR. It will give you an idea of how those systems really performed.

 II. MTR Economic Model (MTR-EM)

The MTR-EM was designed to help investors peer into the future and set expectations for the market 3 to 6 months in advance. This is done by using changes in real-wages for all non-managerial workers in the U.S. Real-wages is what people actually make after factoring in inflation. If wages continue to rise, even if inflation is going up, consumers will spend and this supports rising stock prices. This economic model was derived from the analysis done by Joseph H. Ellis in his book Ahead of the Curve. 

Here is the trick, if unemployment rises but real-wages continue to rise then consumers will spend and rising unemployment has a lessor (or no) impact on stock prices. Unemployment changes is a lagging indicator and investors have to be careful when allowing unemployment numbers to influence investment decisions. 

Review the MTR-EM chart below from late 2007. You will notice that real-wages (green line) spiked down (and employment was dropping).  These were red flags to investors to get out of the market or prepare to short the market as a whole. Look for a 2% to 4% change in the (green line) and the market will soon follow. 

MTR Investor Group Disclaimer