It is not a good idea to “bottom pick” by only buying funds that move up from the bottom rungs quickly. The purpose of the model is to direct you into long term trends in the strongest sectors.

While a fund that is moving up quickly may be heading into a long term uptrend, it could also be reacting to short covering by institutions. After rapid price spikes these sectors can just as easily turn down again.

The model strategy attempts to capture the upper three quarters of long term trends. Capturing the lower part of new swing moves is outside the model’s strategy and is highly risky because what appears to be a new uptrend is often just a reaction move in a continuing downtrend. “Timing” the model signals can have a negative effect as you wait for a lower priced fund to move while a stronger fund keeps going up.

In general, you don’t want to time your entries and exits differently than the model signals. The model tries to capture the big trends not the little blips.

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