Re: [TSPStrategy] Latest Zweig Model result

[Edited Message Follows]

Carlos,

Actually the Zweig Model merely declares the market a buy or a sell. The latest declaration (a sell) stands until the opposite signal is given. The model generates a number of points so that readings near the maximum possible indicate a buy and readings near the minimum indicate a sell. Take the current situation: The model is currently reading 2 our of 10 possible points, which is in definite sell territory. Sometime in the future the number of points will begin to rise as the particular indicators (like changes in the Federal Reserve Discount Rate) become more positive. The sell signal remains in force until eventually, the indicators become positive enough to give a buy signal.

The comments about changes in November are entirely my expectations about future Federal Reserve interest rate increases, based on what Powell has done in the past. I could be entirely wrong. If the Federal Reserve continues with its current plan, then the sell signal by the Zweig model gives a reasonable expectation of stock price performance in the near future. If the Federal Reserve decides not to raise interest rates in November, then stock prices might  increase strongly, even though the Zweig model is still giving a sell signal. This is the problem with trying to time the market.

Situations like the present one (a scary down market) are very difficult for long-term buy-and-hold investors. That is why I pointed to a future less negative change in Fed policy which I believe is possible based on Powell's behavior.

I believe that the best investment policy is to maintain a preferred asset allocation and ignore models that give information on market timing.

Sorry if I just added to the background noise and confusion.

Good luck,
Tex

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Ditulis oleh: Andriansyah -