Timing the Market
Portfolio123 Timing Models

Systems for timing the market are generally driven by the price and volume action of the market. This includes not only Dow Theory type systems, but many of the breadth and sentiment systems as well. The timing systems from Portfolio123 are an exception.

Two systems are offered. One is based on the Fed risk model (described in detail on the Portfolio123 site) and the other is based on the direction of the Current Year EPS of the S&P 500. The signals for the systems are updated on a weekly basis.

Timing the Market - Performance

In the table below, the performance results of the Portfolio123 EPS system and the gains that would have resulted following it compared to the gains possible following a 10 week / 40 week SMA crossover or buy and hold are shown.

For the period October 6, 2001 through October 15, 2010, the EPS and Crossover system results are based on going to cash when the model signaled adverse market conditions.

Basis of EPS Market Timing system

The basis of their system is that the market will be favorable when the EPS is rising and adverse otherwise. The effect on performance is reflected in the table above. For every strategy I have tested on their system, the timing system has improved performance by avoiding adverse markets.

If timing the market is something you are considering this may be worth the look. Unlike a black box timing system you would buy from a system vendor, the workings of this timer are open to you. And the modest fee to use Portfolio123 as an "Investor" membership is probably not much different than the fee you would pay for a timing system.

Even more interesting - the timing can be incorporated directly into a screen or a simulation. This saves the headache of having multiple systems and having to check the condition of the market and adjusting your strategies manually.

To take a look requires signing up for a 15 day free trial (if you sign up from this site you will get an extra 15 days in your free trial). If you do not have much experience with stock screening, my suggestion is the Portfolio123 "Investor" membership. If you are more experienced, the learning curve for the more sophisticated "Screener" membership will not be as steep.

In any case, signing up from this site will give you 30 days to experiment.

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Reviewed Sep 2016