Bear market
a market that has been losing value over a period of time. The investment industry has utilized a decline of 20 percent as an “official bear market”. It should be noted that 4 out of 5 stocks decline in value during a bear market. Because the goal of the club is not to lose money, our definition of a bear market is any market that does not qualify as a bull.
Bear Market Box
All program indicators are in bearish mode. Suggest members employ inverse ETF’s (inverse ETF’s appreciate in value when the benchmark is declining in value) to profit from a market decline.
Bull markets
a market that has been gaining value over a period of time. To qualify as a bull market under the Clubs trend following program the market has to fulfill a variety of technical requirements. It should be noted that 3 out of 4 stocks appreciate in value during a bull market.
Bull Market Box
All program indicators are in bullish mode. Suggest members be fully invested during this period. Members having a high-risk tolerance may employ leveraged ETF’s. Leveraged ETF’s appreciate in value at 2 or 3 times the underling benchmark. Example: if the S&P Index appreciates 10 percent the leveraged ETF would appreciate 20 to 30 percent. Remember leverage is a two way street, if the S&P index declines 10% the leveraged ETF will decline 20 to 30%.
DIA (Diamond Trust)
An exchange traded fund (ETF) that seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the Dow Jones Industrial Average (DOW 30). The fund is a component of the Clubs trend following program.
Exchange Traded Funds (ETF)
An investment vehicle, traded on stock exchanges, that holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Additional benefits include low expense ratios, diversification, tax efficient, transparency, flexibility and their simplicity to use and understand. The Club recommends members consider the utilization of ETF’s as their investment vehicle of choice.
Growth Stocks
The growth stock list is composed of stocks exhibiting strong fundamental growth (sales and earnings growth), and upon fulfilling the Clubs trend following criteria will appear on the growth list. Because of the volatility inherent in these stocks we suggest that the list be utilized only when the trend of the market is bullish.
Investment Signals
All signals are generated from the Clubs trend following program and are applicable to the overall market. The development of these signals is generated from the moving averages originating from short, medium and long term price movements together with support and resistance points.
• Buy - Fully invested in qualified stocks and ETF’s.
• Pullbacks – Delay further investments and adhere to stop- loss orders. Accumulate funds to be invested on buy signal.
• Sell – Move to the safety of cash
• Bear Rally – Depending on members risk tolerance, investments in qualified ETF’s are suggested.
IRA (Individual Retirement Account)
An investment account used by individuals to earn and earmark funds for retirement savings. There are several types of IRA’s: Traditional IRA, Roth IRA’s, SIMPLE IRA’s and SEP IRA’s.
Member’s Monitor
Club members request coverage of specific investments (stocks/ETF’s) using the program signals to determine investment decisions.
QQQQ
An exchange traded fund (ETF) designed to correspond generally to the performance, before fees and expenses, of the NASDAQ 100 Index, which consists of the largest non-financial securities listed on the NASDAQ Stock Market. This fund is a component of the Clubs trend following program.
Scaling In
The process of using multiple separate trades to establish an investment position. When used correctly, scaling in can be used to reduce the overall risk of the investment. For example, the initial position is established on a buy signal, as the signal becomes stronger or additional signals are generated an investor would add to the position. Scaling in and out of positions is highly recommended to Club members.
SPY (Spider)
An exchange traded fund (ETF) that holds all of the S&P 500 Index stocks. The fund seeks to correspond generally to the price and yield performance, before fees and expenses, of the S&P 500 Index. Provides investors with a method of investing (buy and sell) in the largest 500 publicly traded companies in the United
States. The fund is a major component of the Clubs trend following program.
Trend- Reversal Program
This program consists of being invested (long or short) in the stock market at all times. Upon issuance of a Buy signal from the program, members invest in the S&P 500 Index (ETF SPY). When the program issues a sell signal, members close the long position and invest in the short S&P 500 Index (ETF SH).
Members continue to invest in the program as the signals dictate. Adhering to the program for the past 15 years would have resulted in every $10,000 invested appreciating to over $73.000. The same investment in a buy and hold program during this time frame (july 09) resulted in $10,000 growing to $22,000.