FAQ 4-Indicator-1 Usage

How do I use the “Major Market Timing Trend Indicator” (Long-Term) #1 for my 401k mutual funds and exchange traded funds?

  1. The publisher allocates his ETFs and the mutual funds in his 401k account according to the following table – the table provides guidelines to select funds based on current market conditions. There are three different fund allocations that he uses based on the three possible long term market timing indicator positions.
  2. Mutual funds are traded in the 401k account, ETF’s are traded in the brokerage account or Roth IRA.  The approaches are the same between 401k and brokerage/IRA accounts, but with different funds.
  3. Make sure that you include the exact funds that you will use in your plan – record which funds and what allocation you will use. Keep your plan readily available as market conditions can quickly change.
  4. Many 401k providers penalize for moving out of funds after less than 30, 60, or 90 days (or won’t allow you back into the fund for a certain period).
  5. Please make sure that you carefully understand all mutual fund exchange restrictions, fees, penalties, and other policies/charges. Please read the 401ktrend.com legal disclaimer before taking any action.
Indicator #1 Publishers 401k Allocation Publishers ETF Allocation Approach Market Conditions New Contributions
Up 100% Aggressive Growth Fund* (See note) OR

  • 50% Aggressive Growth Fund* (See note) AND
  • 50% S&P 500 or Total Market Index Fund
100% Index ETF (e.g. QQQQ, SPY, EEM) OR

  • 50% Index ETF #1 AND
  • 50% Index ETF #2
Moderate to Aggressive Suggests that the current long-term market trend for the indices represented is “Up”. Probability of an upward move exists. The publisher adds new monies to “Bear Resistant” fund or cash fund.
Hold-Reduce 100% “Bear Resistant Fund” OR

  • 50% “Bear Resistant Fund” AND
  • 50% Bond Index Fund or Cash fund
100% “Bear Resistant Fund” (e.g., XLP, XLU, etc.)OR

  • 50% “Bear Resistant Fund” AND
  • 50% Bond Index Fund or Cash fund (e.g. TIP)
Moderate to
Conservative
Suggests that current long-term trend is unclear – the trend may be flat, slightly up, or moving down. A 5- 10% market decline is likely to occur.Hold-Reduce indicators are rare for Indicator #1. The publisher adds new monies to Bond Index fund or cash fund only.
Down
  • 75%-100% Bond Index Fund OR Cash fund
  • 0-25% Bear Resistant Fund
  • 75%-100% Bond Index Fund OR Cash fund
  • 0-25% Bear Resistant Fund
Very
Conservative
A significant market decline has occurred, and there is risk of a larger downward move. The publisher adds new monies to Bond Index fund or cash fund only.

*For “UP” indicators: aggressive growth fund(s) in a 401k plan may be suitable.  An “aggressive” fund will have outperformed the S&P 500 during past up trends, but typically falls much more than the S&P 500 during down trends. The “aggressive” fund must have out-performed the S&P 500 since March 2009. “Aggressive” funds may include small stock funds, technology funds, and some emerging market funds. There should be no restriction or penalty for exiting the fund after 30 days. The publisher favors two aggressive funds for “Up” indicators in his 401k ( “FDGRX” and “RLPIX”), and both “QLD” and “SSO” in his brokerage account.