Category Archives for "Random Thoughts"

The TFM 10% System is a simple market timing system for the S&P 500. The "designer's intent" was to help you avoid the occasional "diaper change moment*" My thinking is that if the Ps are going to lose half or more of their value (as they occasionally do!), they're going to lose 10% first. Therefore, we need to think seriously about exiting when it drops 10% or more from their 50-week closing high. 

I added in a whipsaw filter for buys and sells to help reduce the amount of ins and outs (i.e., reduce false signals).

For buys, the weekly S&P 500 must have 2-bars of upside 50-Landry Light (lows > the 50-week) and be within 10% of the 50-week closing high. An example of this is shown below (coming out of the pandemic bear market). Notice that there are 2-bars of lows > 50-week moving average (Landry Light) and the close (3) is within 10% of the 50-week closing high (the green line on the chart). 

Since they "slide faster than they glide," the rules for sells are less stringent: Exit the market when the S&P has to closes 10% or more below the 50-week closing high and is also below its the 50-week moving average. The pandemic sell signal is shown below. 

Last Friday (02/17/23) the market has 2-bars of weekly upside Landry Light but closed more than 10% away from its 50-week closing high. So, it was close, but not cigar to a buy. 

Since the market continued to slide since then, the soonest buy signal that we could see would be at least 2-weeks. This  would take quite the miracle though. We'd have to have the mother-of-all gaps on Monday (02/07/23), followed by another week of serious strength. In reality, it'll probably be another 4-6 weeks before we see the next buy signal. Stay tuned to the Week In Charts (and for my Gold Members, the Facebook Group) for updates. 

May the trend be with you!

Dave Landry

*"Diaper change" refers to when a market makes a sharp adverse move against you. I borrowed this term from Ian McActvity. RIP my brother from another mother!