TFM 10% Sell Signal Triggered (Now Official) – Dave Landry on Trading

TFM 10% Sell Signal Triggered (Now Official)

By Dave Landry | Random Thoughts

Trade Successfully

Random Thoughts

by Dave Landry

03/12/22 Update

The signal on 02/23/22 was based on a "rolling" weekly chart (e.g., Monday to Monday, Tuesday to Tuesday, etc..) and not a calendar weekly chart (Friday to Friday). As of 03/11/22, the signal is also a sell signal on a calendar basis.

TFM 10% 2022 Sell Signal

As of the close on 02/23/22, we have a TFM 10% sell signal in the S&P 500 (rolling weekly basis-e.g. Wednesday to Wednesday).

The signal triggered because the S&P had dropped more than 10% from its 50-week closing high and it has closed below its 50-week moving average.

I view this as a MAJOR sell signal. 

TFM 10% System

So What Does This Mean?

Market timing is less about beating the market and more about not letting the market beat you. The goal with this system (and ANY of my market timing) is to get out of the way when necessary. Borrowing a line from my brother-from-another-mother Ian McActivty (who I'm pretty sure is looking down on us laughing-and finally will be vindicated with his "Ya see, maybe you should own a little gold! mantra.), you want to avoid the "diaper change" moments. I see a diaper change as when the market drops 20,30,40,50, and yes possibly 70% or more.

TFM 10% Results

Notice in the chart and spreadsheet above that the market dropped nearly 30% after the "pandemic" signal. True, it did recover all of its losses, but as I preach, "buy and hold will work until it don't." And, it's a lot easier to sleep at night while the market continues to implode without having your hard earned capital in harm's way. As I preach, borrowing a line from my buddy Greg Morris: "Whipsaws are frustrating. Bear markets are devastating. You can survive frustration." 

Watch the video below for more info.  

So What Do We Do? Should I Bail On All My Long-term Holdings?

That's up to you. I just call 'em as I see 'em. I am not a registered financial advisor. In fact, some people call me a Trend Following Moron (TFM)-hence the name of the system. Talk to your professional financial advisor. I'm sure he/she/they/them will tell you to just hang on. "It'll come back! We're in for the long haul! Markets go up on average 12% per year (which is based on an 81-year time horizon, but who's counting)." They all tend to drink the same Kool-aid made by HODL Corp.

The market might come roaring back-and I hope that it does. Again though, buy and hope will work until "it don't." 

May the trend be with you!

I'm Dave Landry and I approved this message

Dave Landry


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