2:03 – What exactly are your indicators?
short term indicators
One of the biggest unspoken concerns that investors have is avoiding another 2008. Throw that one in there with “how to know your advisor isn’t Bernie Madoff” and “how to not miss a big market run-up” and you’ve covered the “trifecta”. In this week’s Mullooly Asset Management podcast, Tom and Brendan discuss how investors could have side-stepped some damage in 2008. They explain how employing a tactical game plan might have minimized some of the losses many experienced.
The tactical game plan here at Mullooly Asset Management revolves around our use of point and figure technical analysis. These charts (provided by Dorsey, Wright and Associates) provide us with critical information we use to manage money for our clients. We use short, intermediate, and long term indicators to build an investing blueprint.
Short term indicators give us an idea of when we should be making investments. To put it plainly, they offer entry/exit points in the market. When it comes to the short term indicators, we would rather be investing when they’re pulling back (not over-bought).
Intermediate term indicators tell us how bullish or aggressive to be. They let us know when to be actively investing. This tends to be when markets are generating more buy signals than sell signals, signifying more money is moving into the markets. When this scenario occurs, you’ll often hear us referring to it as being “on offense”.
The long term indicators mean precisely what you’d expect. They show us long term market trends. One thing that our long term indicators can show us is when it may be preferable to have money in cash instead of the stock market.
Now that you understand the underlying basis of having a tactical game plan, we can get back to trying to avoid another 2008! Tom and Brendan go through the short, intermediate, and long term indicators as they were in late 2007 through 2008. While Wall Street was still bullish in early 2008, our indicators were showing negative signs.
We certainly aren’t saying that these indicators are a magical crystal ball that tells us when financial disasters are going to occur. However, utilizing them may have helped investors minimize their losses during 2008. The problem is that so many investors are into other concepts like buy and hold and asset allocation. They were strapped in for the ride in 2008, and it was an unpleasant one for most.
Tune into this week’s Mullooly Asset Management podcast to hear what our indicators were telling us in 2008, and to learn how having a tactical investing plan can go a long way in trying to avoid another 2008.
When it comes to investing, the question that everybody wants answered is, “When is the right time to invest?”. Tom and Brendan talk about the different market indicators we use at Mullooly Asset Management in this video. It would be great if there were one simple way to know whether or not it was a good time to invest, but there isn’t. Nobody can predict the future, but we can rely on different indicators to give us a better understanding of stock market conditions. This is part of our investing method at Mullooly Asset Management. We utilize long term, intermediate term, and short term stock market indicators to help us decide if it is time to invest more or take money off the table.
Tom refers to this investing strategy as a “dimmer switch” approach. As different market indicators fall or improve, we gradually buy or sell accordingly. The “dimmer switch” approach to investing makes a lot more sense than using an “on/off switch” mentality. The indicators help us to avoid being too bullish when the market is doing well, and too defensive when the market isn’t.
So when is the right time to invest? Watch this week’s Mullooly Asset Management video and learn more about how we determine that.
Every investor would love it if there were one way of knowing whether to invest more or get out of the stock market. Unfortunately, we don’t have crystal balls that predict the future. That leaves many people wondering how to know when to get out of the stock market and when to get into it. While we may not be able to see the future here at Mullooly Asset Management, we do have a strong group of indicators that allow us to make informed investment decisions. Tom and Brendan discuss these indicators in this week’s Mullooly Asset Management podcast.
Tom explains that we use a “dimmer switch” approach to investing at Mullooly Asset Management. Meaning money moves into and out of the market in increments based off our indicators. Three groups of market indicators factor into our investing methods. These are short term, intermediate term, and long term indicators. All of these indicators contribute to our overall approach when buying or selling investments. Some investors might wonder how to know when to get out of the stock market or when to get into it, but these indicators give us clear signals.
Tom and Brendan discuss the different indicators next. They begin by explaining that short term indicators can move on a daily basis. They are mainly used to determine entry and exit points in the market. Short term indicators don’t play a huge role in the bigger picture for long term investors. However, sometimes the short term indicators roll over into the intermediate term and make some noise. There are eight different intermediate term indicators. They don’t all have to move at once to make a difference though. Sometimes just one intermediate term indicator can change the market. Typically they will change in bunches over the course of a few weeks. When this happens it can signal that action may be necessary. Especially when the intermediate indicators begin affecting the long term. Long term indicators are most important to the big picture. When long term indicators change it is a big deal.
Here at Mullooly Asset Management we use this “dimmer switch” approach to investing because it helps us avoid being too bullish at market tops and too defensive at market bottoms. While other investment managers wonder how to know when to get out of the stock market, we have a clear plan of action that gives us real signals. We utilize them to help our clients make money.
In this video from Mullooly Asset Management Tom and Brendan talk about short term indicators. Short term indicators let us know what will likely be happening in the market in the coming days and weeks. Their importance to investing is basically showing us when it is a good time to take money in or out of a market. Many of the same indicators that are judged in the long and intermediate term are also used as short term indicators. All of these indicators are vital to our method of point and figure charting here at Mullooly Asset. We keep watch over the long, intermediate, and short term indicators each day to make sure that we are investing wisely. Take a look into how we check out short term indicators in this week’s video.
In this week’s Mullooly Asset Management podcast Tom and Brendan wrap up their talk about indicators. In previous weeks they have discussed long and intermediate term indicators. Long term indicators are a confirming indicator of where the market will be headed for the long term. Intermediate term indicators are used to tell us if we should be on offense or defense at the present time. They can apply to the market anywhere from a few weeks to a year into the future.
This week’s topic is short term indicators. These indicators can hint where the market is heading in terms of days or weeks. Many times the short term indicators spill over into the intermediate and long term indicators. The primary purpose of short term indicators is to determine entry and exit points for different markets. This means they can show us good points to get into certain markets, and good points to take money out of other markets.
There are five different short term indicators that we use at Mullooly Asset Management. The first is the bullish percent for all mutual funds. The bullish percent for all mutual funds has short, intermediate, and long term charts, so this indicator has been in our discussions for three weeks now. More indicators include the 50 day moving average and the 150 day moving average for the New York Stock Exchange. These averages are 10 weeks and 30 weeks respectively. We also look at the hi-Lo for the New York Stock Exchange. This is the number of stocks making new highs versus the number of stocks making new lows. The last short term indicator we look at is advance/decline. Advance/decline is the number of stocks advancing versus the number of stocks declining.
Like we do with intermediate and long term indicators we use these short term indicators to keep an eye on the X’s and O’s. We specifically look for buy and sell signals, and make our moves accordingly. These five indicators all move independently most of the time, but when they move together it can create a strong direction for the short term.
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