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IndexPilot has developed a 100% mechanical, unemotional Stock Market Timing Model that is both powerful and simple to use. This proprietary Model is based upon a sophisticated analysis of economic indicators and technical data covering the period of the last fifty years. Economic indicators include interest rates, consumer price index, and general economic activity levels of all kinds. Technical data include statistics about the behavior of the market itself, such as price and momentum changes of stocks, bonds and other financial instruments, as well as the volume of these instruments traded. It also includes an analysis of internal market components such as advancing/declining volume, advancing/declining issues, new highs/new lows, sentiment indicators such as the Commitment of Traders, VIX, Public/Total short ratio and the Public/Specialist short ratio. We also use a few seasonal indicators on the market itself.......all combined into a single, potent timing system.
Each evening we update approximately 50 market data parameters. We then run the timing model to determine if any signal changes were triggered. If a signal change has occurred, we notify you by email that evening. The key to success of IndexPilot is the analysis of these enormous amounts of data.
It provides an excellent and easy way for investors to time the markets. The Timing Model is the culmination of research and development which has been ongoing since 1994; it's the result of leveraging years of experience and market data and has been backtested to 1986. Our Model is not intended for day traders, but for investors, as it only generates about 20 signals per year. Over the past 18 years, these signals have proven extremely accurate, as shown on our track record page.
Based on market conditions, IndexPilot's Market Timing Model will generate a Buy, a Sell or occasionally, a Cash signal. Once a signal has been issued, it remains in effect until a new signal invalidates it. Our Market Timing Model is run daily after the market close, and if a new signal is generated, we post it on our Current Signal page by 9:30 pm ET that same day as well as sending an email notification to all subscribers.
In order to access the Current Signal page, you need to subscribe to our service. Once a subscriber, you can login to the site and check the current signal at anytime. IndexPilot also automatically sends a notification email to all active subscribers whenever a signal change occurs. In a sense, you might say, IndexPilot will tap you on the shoulder and tell you what to do whenever there's a status change in our model.
We typically use either S&P 500 or Nasdaq index mutual funds to act on the signals. All of our returns, as well as the trades listed on the trade by trade summary of our track record page, factor in this "next day" effect of trading Profunds or Rydex mutual funds. This next day effect is of utmost importance when testing a system. In reality, if you decide tonight you want to buy an S&P index fund, you won't get your order filled until the close tomorrow. Our market timing model has taken this into account in it's testing. Most fund families have a fund which mimics the performance of the S&P 500 or Nasdaq indexes, however, it's been found that our signals will improve the performance of almost any diversified mutual fund. The only funds not recommended for our signals would be those limited to specific market sectors. In addition to sector funds, since signals have lasted anywhere from a day to 18 months, the signals are not recommended for those funds which limit the number of in and out moves. To review the list of mutual funds and stocks we trade, please visit our strategies page.
How has the IndexPilot timing model negotiated market crashes, political turmoil and economic crises?
It's easy to make money when the market is going up, as the old market saying bears, "all ships rise with the tide". What separates the haves and have-nots is performance during times of turmoil, whether economic or political. The true "litmus test" for any system is how it handles the "unexpected". Take a look at the graphs below to see how IndexPilot weathered some of these stormy times.
Crash of '87
Everyone remembers the "Crash of '87". The bond market had topped in the spring of '87. At that time the stock and bond markets had become disjoined with the stock market climbing to what was, at that time, historic values. Then, on October 19th, 1987 the Dow Jones Industrial Averages experienced a decline of over 500 points in 1 day. In retrospect, analysts called it a mini bear market that began and ended in less than two months. Utilizing the IndexPilot signals would have achieved the following results:
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| Blue markers indicate Long Signal Entry, Red markers indicate Short Signal Entry. Click image to enlarge. | | |
July 1990, Saddam Hussein invades Kuwait
This would naturally fall under the heading of political turmoil, when Iraq invaded Kuwait, it set off a precipitous decline in U.S. markets, that decline peeled off 32% in the NDX and 19% in the S&P 500 index. Following the IndexPilot signals would have yielded the following results:
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| Blue markers indicate Long Signal Entry, Red markers indicate Short Signal Entry. Click image to enlarge. | | |
Remember the "Paper Tigers" and the Asian Financial Crises in '98
The economic and financial problems in countries such as Thailand, South Korea and China make their impact on the markets in the U.S. The result was a sudden drop in the NDX of 17%, while the S&P 500 declined 16%. The following chart shows how IndexPilot signals performed through this financial crises:
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| Blue markers indicate Long Signal Entry, Red markers indicate Short Signal Entry. Click image to enlarge. | | |
the first "Bear Market" of the new millenium
Naturally, the most recent downleg of the current bear market from March 2000 to March 2003 is much closer to home than any of the "crashes" of a decade or two ago. We display our graph from the front page to refresh your memory of how the IndexPilot signals negotiated this minefield:
What's especially interesting about the IndexPilot Timing Model is how it adjusted from a 10 plus year Bull Market, to a 3 year Bear Market, the proportions of which haven't been seen since the Great Depression. The robustness of the model allowed it to go from being long the market over 80% of the time during the bull, to only being long the market 60% of the time during that bear run. It may sound strange to hear it was long the market 60% of the time during a 3 year bear market....that is, till you recognize the fact that markets tend to go down much faster than they go up, the IndexPilot model was able to accumulate staggering gains on the short side in very brief timespans. If you would like to see trade by trade summaries of any of these time periods, please visit our Track Record page.
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