BullGap. momentum market timer

Momentum Market Timer (MMT)

The Momentum Market Timer (MMT) is a trend-following system that is designed to take advantage of the cyclical nature of the market. Regardless of whichever market that you are following, they all go through the same phases and shifts. They are inherently cyclical. Additionally, these cyclical patterns can be found in different time frames. Whether you are looking at it from a 1-year time frame, 6 months, 1 month, 1 day, or 4-hour time frame - you will find this prevalent in any stock or market index. And the key to remember is when one market cycle completes, the next one begins.

Before diving into some of the details, let's provide you with how well BullGap's MMT system has delivered. Below is a screenshot of our MMT in action. You will see that the MMT accurately found the near-optimal buy and sell off the market for the ETF stock TQQQ\SQQQ from October 2018 to October 2019. If you were trading with the MMT, you would have profited 175%.

The Momentum Market Timer (MMT) is a quantitative model that takes into account three other proprietary market timing indexes to determine the health of the overall market. From these timing indexes, the MMT engine runs a large dataset of data to identify the near-optimal time to buy and sell a stock. The MMT is objective and does not read the information from talking heads, or the latest stock news flash for the day. It reads, identifies the trend and provides the signal for when to buy and sell in the market.

The Cycle Trend Index

The main driving force behind the MMT is the trend index or cycle index. It measures the major index funds such as the SP500, Nasdaq, and DIJA to determine where the price movement is currently at. Each time series of a cycle has a duration, peak, and trough. This duration along with their peaks and trough coincide with price movements from a significant low to an identifiable high, followed by a consolidation period. This pattern is spread among different time frames and different time durations. Through machine learning (ML) and the large major index dataset, the MMT analyzes and identifies the beginning and end of these cyclical patterns.

Momentum Index

The momentum index defines the market's overall movement as it relates to price movement and volatility. SP500, DIJA, NASDAQ, A\D line, Hi\Lows are some of the major indices in this component dataset. In conjunction with this, it also leverages several breadth indicators to measure the overall breadth of the market. The indicators are evaluated to the following state: Bullish, Bearish, or neutral. Some of the breadth indicators used are McClellan Oscillator, Price percent oscillator, Derivative oscillator, Zweig breadth indicator, etc.

The Momentum index aggregates this data to the Momentum Market timer to identify strong signs of buying or selling pressure.

The Fear and Greed Index

Bullgap has developed a Fear and Greed index that measures investor sentiment in the stock market. When the indicator reads greed, it typically means investors are in a bullish state and are buying stocks. Conversely, if the indicator reads fear then it means that investors are fearful and are in a selling state.

Several key datasets are pulled to build the index. CBOE Volatility index, Put/Call Ratio, Dividend Yield Spread, NYSE advance-decline ratio, KCFS index, etc.

The final value of this indicator is a weighted sum of the various indicators describing market sentiment.