WINNING INVESTMENTS with EXCHANGE-TRADED FUNDS


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  How It Works

The method is simple. It has only two parts. Part one measures the direction of the stock market by using a selected group of exchange-traded funds.

These funds are extremely useful for investors and traders. I selected seventeen of them with good trading volume and desirable volatility. When this group is clearly rising, the market trend is up and vice versa when the group is falling.

The reason they are so reflective of the whole market is that these seventeen funds contain effectively 5,160 stocks with a total market value of $135 billion (as of December 2004). Their median trading volume is around 2.5 million shares daily.

I structure these funds into a Leading Trend and a Lagging Trend. When the two trends cross, the overall Market Trend changes direction.



Part two measures the performance of all seventeen funds over a six-month period and ranks them from the best to the worst.

When the market is up, you want to own the best. When the market is down, in my opinion you should not want to own any stocks or funds. And traders may sell short the worst of the group.





 


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