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Market Timing

Monday, July 17 2017

Nothing moves the stock market in a more predictable fashion than corporate earnings.  At this time, investors are betting on the Trump agenda (lower taxes, better intenational trade deals, less giveaways, less regulations, etc.) to greatly increase corporate profits.  Hence, the big run-up in the markets since the presidential election in Nov'16.

Although there are many obstacles along the way, the bet is still that most of the above will become "law", and this will result in higher corporate profits in 2017 and/or 2018.  Because the fat kats basically have insider informantion, stock prices always lead profit direction, both up and down. 

To that end, the markets (Dow and S&P 500) both closed at all-time new highs on Friday, June 14th. Furthermore, the S&P 500 has not experienced even a -5% drawdown all year.  From a seasonality standpoint, during the last 90 years, in 84% of the years that the market was up at least 8% in the first 1/2 of the year, it was followed by 4-5% gains in the 2nd half.
See below...


Regardless of the above, there is ample reason to believe that the market is ripe for a correction.  Since 1950, the market has experienced at least a -5% drawdown in 91% of the years

And there are indeed some real and far fetched possible reasons (failed Trump agenda, war with North Korea, Trump trouble with Russian collusion in the election, etc.) where the market could experience a real crash (-55% drop).

By and large, MIPS may or may not identify a -5% drop, but would almost certainly identify a "market crash" of 30-50% or more.  In backtesting in 1987 and 2000, MIPS identified the drops and did not lose money in either crash.  In actual trading in 2008 - 2009 (verified by, MIPS not only identified the -55% drop, but made over 100% to the upside!!!

MIPS3 during Oct 31, 2007 - March 31, 2009

   Blue Line - MIPS  +110%
   Red Line  - SPY     - 50%
Red Dots 
indicate trade dates (from

Paul Distefano, PhD
MIPS Timing Systems, LLC
Houston, TX
281-251-MIPS (6477)

Posted by: Dr. G. Paul Distefano AT 12:44 am   |  Permalink   |  Email

MIPS Timing Systems
P.O. Box 925214
Houston, TX  77292

An affordable and efficient stock market timing tool. Contact MIPS
281-251-MIPS (6477)