On Thursday, January 8, 2009, the Price of the VectorVest Composite rose $0.07 per share, the Color Guard showed three green lights, and our Market Timing System gave a Confirmed Up, C/Up, signal. Great, a C/Up signal is supposed to indicate that a sustainable rally is underway. But, the very next day the Price of the VectorVest Composite plunged $0.40 per share and it fell another $0.45 per share the following trading day, Monday, January 12th. The rout was on and we got a Confirmed Dn, C/Dn, signal on January 20th, only seven trading days after the C/Up signal. What happened?

The rosy glow of the "Obama" rally from the November 20th bottom was totally obliterated by a devastating Jobs report on Friday January 9th. This bad news was followed by a series of horrible economic and earnings reports which were more than the bulls could stand. Stock prices went down instead of up right after our "long awaited C/Up" signal. Does this mean that our Market Timing System failed?

We judge the efficacy of our system by what it does for us. It has never failed to signal a major move in the market and it never will. We don't predict the market, we analyze it and we follow it. We got the C/Up signal on January 8th, exactly the way the system was designed to do. Yes, the C/Up was not followed by a sustainable rally, but our system identified the turn to the downside very quickly and gave the appropriate guidance. So we got a whipsaw. How often has it happened in the past?

Here's the record:

1. C/Dn on 03/08/96 and C/Up on 03/22/96.
2. C/Up on 07/13/00 and C/Dn on 07/28/00.
3. C/Up on 09/01/00 and C/Dn on 09/15/00.
4. C/Dn on 05/07/02 and C/Up on 05/15/02.
5. C/Up on 04/05/04 and C/Dn on 04/20/04.
6. C/Up on 06/29/04 and C/Dn on 07/14/04.
7. C/Up on 01/08/09 and C/Dn on 01/20/09.

So we have seen seven reversals in thirteen years. Over this time, we have received 56 Confirmed signals. So reversals have accounted for one out of eight calls. Five of these reversals were Up to Dn cases. This is not too surprising since all of them happened in weak, choppy markets. Is this system any good? I think so, but if you can find a better one, use it. In any event, this reversal is The Mother of All Reversals.