We have taken profits before on the etf TUR (Turkey) back in January. On Monday Oct 7th, we decided to sell the current position and book the small gain rather risk turning it into a loss. The Turkish stock market is still one of the three cheapest markets in the world and has held up surprisingly well given the recent military action. We will keep an eye on it for a potential re-entry in the future.

Our system to time entries and exits in the Equity models gave a new buy signal as of the close yesterday. For this reason, we  bought a position in the DIA this morning. The previous buy resulted in a whipsaw as the stop was triggered and a loss was taken. Even though the short-term timing couldn't have been worse (in hindsight), the loss was within the normal parameters of the system. The system has been tested going back to 1987 and whipsaws like this tend to be a rare occurrence. To reap the benefit of the system's long-term strengths, we need to endure the short-term weaknesses. The Dow going above the Oct 2018 highs could clear the way for the long-term trend to finally resume. 

Our system to time entries and exits in the Defensive Equity, Equity Growth, and Equity Growth Aggressive models gave a sell signal as of the close on Friday. For this reason, we sold the position in DIA this morning. The system is longer-term and averages two signals per year. The market was trending gradually higher when we got the initial buy in February and the confirming signal in April. It has since reversed that trend and fell enough to trigger the sell stop. This is a rare event for this system. There are indicators that the market is oversold and could bounce anytime; however, down-trending markets can always get more oversold. This system avoids that risk.

You may notice that there is a slightly different format to this email compared to other updates you have received. Reason being is that I am using a new system that makes it possible for you to get position updates faster than ever before. You can even choose whether you want to continue to receive updates by email or if you’d prefer a text message (or both). Simple reply to this email with the word text, or both, if you want to receive them via text otherwise I’ll assume email is preferred.

The Dow is now 4.5% below the April high and the April 1 buy signal for the actively managed models is still in place. If the market were to continue falling, the system has a stop-loss limit to protect against a decline larger than 5% from the entry. It’s interesting that investor sentiment (AAII survey) has quickly become bearish with such a small percentage decline from market highs. Even though this could lead to lower prices in the short-term, the bearish sentiment increases the likelihood that the market will eventually resume the upward trend.