iQ ETF Monthly Market Timing Model

MONTHLY MARKET TIMING...with ETFs!

The iQ ETF Monthly Market Timing Model uses sophisticated and tried-and-true technical indicators to market-time five index Exchange Traded Funds (ETFs) monthly.

A Process Only iQUANT Could Create…

Each index ETF represents a 20% allocation of the Model’s allocation.

Each index ETF is represented by its own unique set of entry and exit technical indicators.  If a technical indicator provides a “buy” signal, the ETF is held for a month and re-evaluated the first trading day of the following month.  If a technical indicator provides a “sell” signal, the 20% of the portfolio normally represented by the ETF will move to cash, money market, or Treasury Bill (we use symbol “BIL”) and the ETF will be re-evaluated the first trading day of the following month.

Here are the technical indicators utilized for each index ETF:

  • SPDR S&P 500 ETF Trust (SPY)

    • Entry: 21-day Aroon Oscillator

    • Exit: Price versus 200-day Simple Moving Average

  • PowerShares QQQ Trust (QQQ)

    • Entry: Price versus 2-month high

    • Exit: 3-Day Money Flow Index

  • SPDR S&P MidCap 400 ETF (MDY)

    • Entry: 21-day Aroon Oscillator

    • Exit: 3-day Relative Strength Index

  • iShares S&P SmallCap 600 ETF (IJR)

    • Entry: Prior day return

    • Exit: Fast and slow 14-day Stochastic indicator

  • iShares Russell Microcap Index (IWC)

    • Entry: 14-day Stochastic Indicator

    • Exit: 10- versus 25-day McGinley Dynamic indicator

Potential Benefits

Market timing with ETFs refers to the strategy of buying and selling ETFs based on an investor's analysis of market conditions and trends. Here are some benefits of market timing with ETFs:

  • Potential for Enhanced Returns: ETF market timing strategies aim to profit from short-term price movements, which may lead to higher returns compared to a buy-and-hold approach.

  • Flexibility and Adaptability: Market timing allows investors to adjust their ETF holdings quickly in response to changing market conditions, potentially capitalizing on short-term opportunities or avoiding downside risks.

  • Risk Mitigation: Market timing strategies can be used to reduce exposure to certain asset classes or sectors during market downturns, aiming to mitigate portfolio losses and preserve capital.

ETF market timing strategies involve frequent buying and selling of ETFs with the aim to profit from short-term price movements. While some investors may find market timing appealing, it comes with inherent risks and may result in significant trading costs and tax implications. Additionally, successful market timing is challenging, and the strategies may not produce the desired returns.