Fosback introduced this timing system in the mid-1970s, calling it one of the best short-term indicators he had ever encountered. The system calls for being 100% in stocks at the turns of each. No need for fancy computers or sophisticated software — or to track the markets on a minute-by-minute, or day-by-day basis. In fact, there is no need to track the market at all. Sector Timing Report > Market Timing Stock Market Timing Signal Report Everything you need to know about market timing signal investing and how you can use stock market timing to your advantage when investing in index funds, ETFs, mutual funds, or stocks. 10 Best Stocks Right Now. What Happened in the Stock Market Today On a down day for the markets, see why Ford and Red Hat both soared. The timing of the positive call is no coincidence. The stock market will exhibit strength through June 7, and then weaken until the end of June. This remarkably precise prediction comes from the stock-market timing system that has the best record of any tracked by the Hulbert Financial Digest over the past three decades. Better yet, the system couldn’t be simpler: It trades on nothing but the calendar, exploiting seasonal strength around the turns of each month as well as prior to stock-exchange holidays. There is a catch, however, and it’s potentially a big one: Despite having an outstanding long-term record, this system has lagged the market over the last decade. Following its lead going forward depends on whether you think the past few years are the exception or the new rule. This calendar-based market timing system was created by Norman Fosback in the early 1970s. Stock Market Timings UsaFosback at the time was President of the Institute for Econometric Research; he called this system one of the best short-term indicators he had ever encountered. The system calls for being 100% in stocks at the turns of each calendar month and prior to exchange holidays. It is in cash at all other times. I calculate that, over the 30 years through the end of April, this incredibly simple approach lagged a buy-and-hold by just 0.3 percentage points per year on an annualized basis — despite behind in the market only a third of the time. That’s a winning combination, according to the academics’, since you otherwise would have to give up a lot more than a half of a percentage point per year in order to reduce risk by that much. This is why Fosback’s seasonality system is in first place on a risk-adjusted basis over these three decades among any of the market timing systems tracked by the Hulbert Financial Digest. There are several theories for why the system has worked. One is that short-term traders do not want to be short before a three-day weekend, and so tend to cover any of their outstanding shorts over the couple of sessions before. That means, for example, that the stock market is likely to rise on May 27, the last trading day before the Memorial Day weekend. Another theory for why the seasonality approach works is that retirement plan contributions typically wind their way into the market around the beginning of each month. There is another theory — — according to which erstwhile market-beating strategies will stop working once enough investors know about it and start acting upon it. This could very well be what’s going on with Fosback’s seasonality timing system, since it was spectacularly successful during the decades of the 1970s, 1980s and 1990. Yet it’s hard to prove that this is what’s going on. According to my PC’s statistical software, for example, you cannot conclude at the 95% confidence level that the marked deterioration in the Fosback system’s performance over the last decade is due to anything but random bad luck. It’s of course frustrating that a decade of market-lagging performance is not enough to convince a statistician that a market-timing system is no longer worthwhile. Best Stock Market Timing Software For RunningBut that is the price we must pay in order to follow strategies that have beaten the market over a long-enough period to prove with a high degree of confidence that they’re better than flipping a coin. For example, you wouldn’t be on firm statistical ground to stop following Warren Buffett just because the net asset value of his Berkshire Hathaway hasn’t kept pace with the S&P 500 over the past five years. And the same appears to be the case with Fosback’s seasonality timing system. The bottom line? Assuming you’re willing to give Fosback’s approach the benefit of the doubt, you might want to wait until the end of the first week of June before unloading any sell candidates. And, likewise, you might want until later in June before increasing your equity exposure. For more information, including descriptions of the Hulbert Sentiment Indices, go to or email [email protected] You’re invited to join MarketWatch senior columnists Mark Hulbert and Chuck Jaffe, along with Robert Powell, editor of Retirement Weekly, for an from Montreal to New York on an autumn escape with Crystal Cruises (Oct. This spectacular holiday includes a luxury cruise aboard Crystal Serenity, along with enrichment seminars on investing, retirement planning, and even cultivating your wine portfolio. MarketWatch guests get great special rates, but space is limited, so call our cruise partners now, toll-free, at for more information or to book your stateroom. Best Stock Market Timing SoftwareAdvanced stock technical analysis, market timing, prediction and trading system|||| Identifying a trend, early and accurately, is the key to increase profit and reduce risk in stock investment. DeepInsight combines quantitative analysis with to analyze trading patterns and market data in a great depth, and therefore, predict and catch trends in early stage for individual stocks, ETFs, mutual funds and market indices. It greatly extends man's capability in analyzing massive data.
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