The Long-Term Trend Model

The Trend Model is an uncomplicated moving-average crossover system that is designed to catch long-term trend changes, and it is used to define our long-term market posture as reported to Timer Digest. We use 50- and 200-EMAs (exponential moving averages) to execute this model, however, another combination of moving averages could be used to design a model more suited to your own preferences.

Long-term buy signals are generated when the 50-EMA crosses up through the 200-EMA. Sell signals are generated when the 50-EMA crosses the 200-EMA to the downside. The model is always on a buy or sell. There is no neutral position.

We don't suggest that anyone use these crosses as action signals. They are first and foremost information flags to help us determine the long-term trend and context of the stock market.

This model should not be used to manage a portfolio with 100% of the portfolio invested in a single position. Indeed, no timing model should be used in that manner. Always use good money management techniques.

While we primarily use this model with the S&P 500 Index to determine long-term posture for the broad stock market, it can be used with any price index -- market, sector, or individual security -- to determine if they are experiencing their own individual bull/bear market.