ETF Core Strategies
Aim: To trend-trade general equity ETFs so as to ride rallies and buck busts in the Australian share market.
The indicators that MarketTiming uses for its Conservative share strategies, and ETF Rotation strategy are trend-following, or lagging, indicators.
To generate ‘Buy’ and ‘Sell’ signals for its share and rotation strategies MarketTiming uses a range of technical indicators, definitions for which are provided by www.investopedia.com. The selection and mix of indicators used for each strategy and the precise specifications for each indicator remain confidential to MarketTiming.
· Exponential Moving Average (EMA)
· Moving Average Crossover (MAC)
· Moving Average Oscillator (MAO)
· Moving Average Convergence-Divergence (MACD)
· Relative Strength Index (RSI)
· Smoothed Rate of Change (SROC)
· Elder ray Bull and Bear Power indicators
· KST Momentum indicator
· Coppock indicator
· Trailing Stop-Loss Limits
These indicators are widely recognised in technical literature, books and websites on share market trading and most are available on sophisticated share market charting platforms.
The first two technical indicators are ‘directional’ and therefore best suited for trending markets where prices are moving generally up or generally down. The next six indicators are primarily ‘momentum’ indicators which are most suited to ranging or sideways markets where peaks and troughs occur at roughly the same price. The RSI, SROC, Elder ray, KST and Coppock indicators are also useful for flagging when a trending market is over-stretched negatively or positively thereby warranting a shift to a more active mode (within a conservative timing strategy) in order to catch any market reversal early.
Trailing stop loss limits apply to the Conservative share strategy. They only come into play if other indicators are slow in generating a ‘Sell’ signal in a plunging market.
The ETF Rotation Strategy relies on positive momentum scored over multiple time frames as a stop loss measure since there is no point in staying with an ETF that has a negative momentum score.
We do not use qualitative or discretionary judgment to override the objective signal results of our Conservative and Rotation market timing models based on our chosen technical indicators. Rather, our approach is always to allow the technical indicators to mechanically generate Buy and Sell signals without human bias.