SectorSurfer Momentum Index

The SectorSurfer Momentum Index selects a portfolio of 6 sector ETFs monthly, four economic sector ETFs and two geopolitical sector ETFs.

- During Bull Markets, it holds an aggressive  allocation: 100% equities, 0% bonds. 

- During A Market Crash, the Index automatically shifts to 100% defensive positions. 

- Our Bull/Bear Indicator, StormGuard-Armor, assesses the market's bull vs. bear status.

- Advanced signal processing, that we call Temporal Portfolio Theory, employs the cross-disciplinary sciences of Matched Filter Theory and Differential Signal Processing – the same technologies that enable WiFi, USB, iPhones, digital TV, and remotely controlled rovers on Mars to perform so well. None of these were possible 68 years ago when Modern Portfolio Theory first taught us to "buy-and-hold" and  "diversify-and-rebalance." The Index additionally employs a trifecta of Artificial Intelligence methods to improve the quality of its decisions. They include: 

- Adaptive Tuning that seeks to eliminate hindsight bias in the momentum algorithm; 

- Fuzzy Logic that seeks to better assess the market’s Bull vs. Bear status; and

- Genetic Algorithms that evolve the strategies to eliminate hindsight selection bias. 

While most taxable account funds lay fallow because active trading leads to short-term capital gains taxes, the SectorSurfer Momentum Index is a complete self-contained, tactical portfolio management systems in a tax-efficient, exchange-in-kind, ETF wrapper. They pursue tactical momentum and risk mitigation strategies internally while delivering long-term capital gains benefits externally. 

The SectorSurfer Momentum Index seeks to improve performance by first identifying bull and bear market conditions, then using growth and income momentum strategies to select four economic sector ETFs and two geopolitical sector ets during bull markets and four or more defensive ETFs during a bear market crash. The investment process consists of these steps:

⦁ Identify the Bull Market Universe: The bull market investable universe generally consists of mid to large capitalization ETFs traded on a U.S. exchange in these categories:  sectors,  regions, and countries. Inverse and leveraged ETFs are excluded.

⦁ Identify the Bear Market Universe: The bear market investable universe generally consists of mid to large capitalization ETFs traded on a U.S. exchange in these categories: aggregate bonds, corporate bonds, hi-yield bonds, U.S. treasuries, gold, and broad-based U.S. equity. 

⦁ Assess the Bull/Bear Indicator: The Bull/Bear Indicator seeks to determine whether U.S. equity markets are advancing (“Bull”) or have an elevated risk of decline (“Bear”) by assessing three metrics of U.S. equity markets: price-trend, market momentum, and value sentiment. 

⦁ Bull Market ETF Selection: During Bull markets, the Index further generally develops 12 evaluation Models for each Category, each of them with a different mix of candidate ETFs from its related subcategory. At month-end each Model selects a momentum leader, and each Category selects its overall growth and income momentum leader from the selections made by its underlying Models. The Index further employs a proprietary AI Genetic Algorithm that continuously evolves the set of candidate ETFs associated with each of the Models seeking to adapt to ever changing market conditions and improve investment performance. 

⦁ Bear Market ETF Selection: During a Bear market crash the Index creates two or more defensive models with different sets of candidate funds. Six suitable bear market ETFs are identified.

⦁ Duplicate Selection Reduction: An algorithm attempts to identify duplicate selections and substitute alternatives from the same subcategory. A bull market Index will be comprised of four to six unique ETFs and a bear market Index will be comprised of four to six unique ETFs.