The RUM Wave method identifies market entry points by changing market movements from an unpredictable wave pattern to an approximate sine wave pattern by using a specific market breadth formula. Sine wave patterns are much easier to predict. By layering traditional indicators on top of the sine wave pattern, I am able to identify very specific pivot points.
The above illustration is for educational purposes only, it is not the actual sine wave I use. In practice, the wave is not nearly this clean, which is why I layer other indicators to aid in predicting the troughs.
What will the dashboard look like at a trough?
How to I use this information?
Ultimately, that is up to you the investor. This information is primarily targeted at the overall US stock market. US market index funds are available for trading.
We have been in a bull market. What happens in a bear market?
During bear markets these indicators become more complicated. However, entry points are still identified. The duration of those entry points is what changes. This is when careful trading utilizing well thought out "stops" should protect initial investments.
Why wouldn't I just buy and hold the index?
The RUM wave trading strategy (buy at entry points, set stops on the way up as desired) reduces market risk because we can confidently identify times to re-enter trades. With this analytic data a trader can be comfortable being stopped out of a trade, knowing that the right reentry point will be identified. If the market takes an unplanned nose dive, the investor is comfortably safe on the sidelines awaiting the next entry point.