How do I make the most use of the TrendFlex system?
Investors should remain with the major trend as identified by the TrendFlex system. In a strong uptrend, this could entail simply remaining at your maximum equity exposure based on your current investment profile (i.e. age, risk-tolerance and net worth). As the TrendFlex system score begins to indicate a high risk to the current market trend (otherwise a high probability of a trend change), we will provide suggestions to hedge your exposure to the trend. The TrendFlex Classic system is a shorter-term signal and is more useful for short-term trades, while investors may use this system to hedge their portfolios should the Classic signal diverge from the TrendFlex Allegiance signal. For example, a BUY signal on the Allegiance system may be hedged should the Classic system signal a SELL. Likewise, a low TrendFlex Score (i.e. 1.40 and lower) suggests that the uptrend is risky, and long investors may want to put on a short-term hedge to protect capital.
For new subscribers, Baseline Analytics suggests positioning one's portfolio based on the long-term Allegiance signal, but temper long position entry should the TrendFlex Score suggest a high risk to a trend change (a low score such as 1.40 and below suggest risk to long positions, while a high score such as 2.3 suggests that a downtrend may soon end and that short positions are increasingly at risk). Similarly, if the longer-term Allegiance signal is BUY but the shorter-term Classic signal is a SELL, then it suggested that investors refrain from adding significant long positions until improvement is seen in the Classic signal and the TrendFlex Score approaches the 2.0 and higher level, which would suggest that a short-term market pullback may be ending.
TrendFlex Endurance is a lagging signal which has helped to confirm shifts in the TrendFlex Classic signal. Its use as a timing signal is not recommended, however, objective signals continue to be provided and returns tracked.
How do "trend-following" systems differ from other systems?
Systems can be either "trend-following" or "timing" oriented. A stock market timing system looks to predict a turn in the markets and ideally strives to pick market tops and bottoms. A stock market trend-following system strives to remain with the major market trend (up or down) and does not attempt to pick tops or bottoms. Frequently, the trend-following system will be late to the new market trend, while the timing system will be early. Most successful trading and investment systems are trend-based. Baseline Analytics TrendFlex is a trend-following system built with filters to help assess the risk of the current trend.
Can I expect to achieve the same results as the TrendFlex system?
When TrendFlex issues a confirmed signal change, the entry price for the new signal and the closing price of the previous signal are based on the opening price of the day following the day of the confirmed signal. For example, if a signal change is noted for November 16, the new signal will be based on the November 17 opening price for the S&P500, which will also be the closing price of the previous signal. As the system is either 100% long or 100% short, given a long or short signal reading, respectively, duplicating the TrendFlex results would require a simple yet aggressive trading strategy to shift gears 100% with a signal change on the signal date. As the new trend asserts itself, TrendFlex subscribers will start to approximate the returns of the TrendFlex system as their portfolio composition follows the new market trend. The value of TrendFlex is to preserve capital and to profit by staying with the major trend as long as possible.
How do I best use StockStash and ETF Zone?
StockStash long positions seeks compelling growth and value investments whereby the stock price has established a respectable technical base and represents a good entry point. Baseline Analytics utilizes Metastock software to assist in selection process. Short positions look for fundamentally unattractive companies (i.e. low ROE, record of earnings misses, declining revenue growth) whose prices have gotten ahead of themselves. The selections provided each week are timely in that stock prices are expected to move in the short-term based on the technical pattern. Traders and investors should beware, however, that earnings news and other new events can nullify the recommendation. Although aging recommendations could still move in the direction of the anticipated trend, these recommendations become less timely as time goes on. We also suggest that investors review the industry of the selection so that positions are not overly-concentrated in a single sector (i.e. semiconductors or energy). ETF Zone represents ETF's that represent attractive technical entry-points. A blend of varying ETF's and their respective industries can help maintain a diversified portfolio. As with StockStash, aging recommendations become less timely as time goes on.
Should I enter a trade based on a signal that has been in place for a while?
The start of a new trend presents the best opportunity of profiting from that trend. As the trend progresses, Baseline Analytics provides a suggested balance of tactical positions to address the stage of the current trend.