The Market
Gauge is a relative score, a sort of snapshot which
tells us the current state of the market relative to
where it’s been historically.
While a Gauge of 20 or below is a
Buy Signal,
a Gauge of 90 and above is a Sell Signal and
typically marks the end of a strong Bull market.
Daily Gauge vs. Market Gauge: As a general rule,
all corrections start with the Daily Gauge falling
below 20 (indicated in bold font). This is also a
recommended entry point for all new positions.
However, because the Daily Gauge can be erratic on a
day to day basis, a moving average is calculated to
smooth out the data. We refer to this as the Market
Gauge. Notice how each market sell off has started
with the Daily Gauge first falling to the 20 buy
level. It then takes a few days or weeks for the
Market Gauge to "catch up" with the Daily Gauge. A
movement of the Market Gauge to 20 or below is
indicted in the table by yellow shading.
Notice the consistent
accuracy of the Market Gauge, and pay specific
attention to the precise buy zones in yellow, and
small drawdowns. Also notice the extreme heights of
the Market Gauge in 1987 and 1999, and the
corresponding Sell Signals (90 and above, indicated
with red shading), which lead to major market
reversals. See also the 1990 Recession buy Signal. We
challenge you to find a more accurate
market timing
signal.
|
Buy:
Gauge 20-0 |
Final Low [Average Entry Point]
Drawdown% |
Sell:
Gauge 90 plus. |