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July 27, 2008

Reader Q and A
by Lynn T

7/27/2008 11:13:02 AM

A question came in about the Long Term Investor Buy Signal. Read on for the answer.

Welcome to Lynn T's 1-2-3 PLUS Alert. To learn more about my Partial Leverage Utilization System, click here.

When I added two new components to my service last week - the Long Term Investor Buy Signal and the Long Term Investor Crash Warning Indicator, I knew there would be questions on how to use them to your investment benefit. Here is one such question (along with my answer).

Q: Lynn, as a new subscriber, my question is this: Without leverage advice (1/3 etc) is it up to me to decide how much money I want to commit to this signal? Or does its rarity (2-3 times a year) imply immediate full investment as per my own risk tolerance?

A: First, this is an investment signal. All we are saying with this signal is that it is a good time to put any cash that you have been accumulating to work as an investment.

The signals that this service normally generates (1/3 weighting) are issued separately. In fact, I'll be issuing a signal to add 1/3 (or even 2/3) bullish weighting shortly.

However, if you decide to utilize the long term investor buy signals in another way, feel free. There are many subscribers that incorporate my signals into their own systems.

If you have a question, feel free to ask away and maybe yours will be featured in a future article and may even answer a question someone else had, but didn't ask.

Looking at the weekly chart of the SPY, the bulls have really been battling back against the bears for the past two weeks. Two weeks ago, the bears could have pulled prices down to around $120 - yet the bulls wanted to end the downtrend and held their ground to close the week at around $126.40. Last week, the bears may have won out in the end, but the candle shows that the bulls were trying to make their presence known.

The bears appear that they may have one more week of pull left, but the bulls will have something to say about that. I believe that the end of the downtrend is here, so we'll adjust our weighting accordingly.

Add 1/3 bullish position (see new weighting below).

Current Weighting Suggestion:

1/3 in Bullish Leverage
2/3 in CASH mode

Long Term Investor Buy Signal Alert
Over the past several years, this indicator has predicted several 100-point or more moves in the S&P. There are only 2 to 3 of these signals every year, so they're worth paying attention to. This is an ideal signal for investors to put cash to work following a down move in the market.

A Long Term Investor Buy Signal Alert was issued July 23, 2008.

Long Term Investor Crash Warning Indicator
This indicator is a variation of the widely published Hindenburg Omen. We'll let you know when we're seeing indications of a potential crash to come. This would be a good time for long term investors to take some money off the table.

This indicator is not coming into play at this point in time.

You can email me with any questions at plus@stockbarometer.com.

Have a great week!

Lynn T
+ 1-2-3 PLUS Alert +

Various levels of Leverage can be achieved with the following funds or trading vehicles:

Direxion
S&P 500 Bull 2.5x Fund (DXSLX)
S&P 500 Bear 2.5x Find (DXSSX)

Rydex (Rydex Accounts have morning trade options for AM pricing)
S&P 500 2x Strategy (RYTNX) - Bull (Titan Fund)
Inverse S&P 500 2x Strategy (RYTPX) - Bear (Tempest Fund)

Profunds
Ultra Bull Fund 2x (ULPIX)
Ultra Bear (inverse) Fund 2x (URPIX)

ETFs (ETFs can be traded intra day like stocks)
ProShares Ultra 2x S&P500 (AMEX:SSO)
ProShares UltraShort 2x S&P500 (AMEX:SDS)

Note: while the system will work with the DOW and NDX related funds and ETFs, it is tuned to work best with the S&P.

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