studying stock market trends

Know when to hold and when to fold with the Four Percent Indicator

The Four Percent Indicator guides you to being invested in all major market moves and has produced big gains over the past 25 years. An investment of $100,000 based upon the Four Percent Indicator would have increased to $1,574,162.05 over the past 25 years, a gain of 1474 percent.

The approach is simple and effective, but requires discipline to achieve success because short-term swings that exceed four percent produce losing periods. In addition, as is common with many effective market timing systems, the approach produces more losing than winning signals. Only 42 percent of the 115 signals over the last 25 years have produced gains. However, the winning signals have consistently exceeded the losses of the losing signals and generated big profits over time.

You can examine the performance of the last 115 completed signals of the Four Percent Indicator in the Value Line Arithmetic Index from the buy signal of August 3, 1984 through the latest buy signal of May 29, 2009 by clicking here.

Four Percent Indicator Buy and Sell Signals

Four Percent Indicator Buy and Sell Signals

The approach gives a buy signal when the weekly close of the stock market is four percent above low points (local minima) and a sell signal when the weekly close is four percent below high points (local maxima). For example, the Value Line Index closed at a low point of 1016 on March 6, 2009. The index closed more than 4 percent higher the next week on March 13th, producing a buy signal. That buy signal remained in effect until the index closed down more than 4 percent on May 15th from the closing high of May 8th. The sell signal from that decline was reversed when the market closed up on May 29th more than 4 percent above the May 15th closing low.

Ned Davis developed the Four Percent Indicator based upon the Value Line Composite Index. Martin Zweig popularized its use in his 1986 book Winning on Wall Street.

Very few investors make more money in the stock market than anyone using the Four Percent Indicator could make. Very likely, you would be richer today if you had followed this approach from the first year that you began investing.

You can’t change the past, but you can change your investing future. The Four Percent Indicator is a simple tool that you can use to build a financially sound future. Look at the numbers and see for yourself.


Four Percent Indicator Performance

Signal Date Price Weeks % Change $ Change Cumulative Change
Buy 5/29/2009 1,695.80 2 -6.00% -$100,397.37 $1,574,162.05
Sell 5/15/2009 1,599.88 9 37.32% $455,116.59 $1,674,559.42
Buy 3/13/2009 1,165.06 4 10.89% $119,776.02 $1,219,442.83
Sell 2/13/2009 1,307.47 1 -4.92% -$56,889.61 $1,099,666.81
Buy 2/6/2009 1,375.11 3 -1.15% -$13,486.86 $1,156,556.43
Sell 1/16/2009 1,359.44 7 3.25% $36,802.69 $1,170,043.29
Buy 11/28/2008 1,316.68 3 7.39% $77,953.34 $1,133,240.60
Sell 11/7/2008 1,421.70 1 -5.13% -$57,080.67 $1,055,287.25
Buy 10/31/2008 1,498.60 8 27.04% $236,792.29 $1,112,367.92
Sell 9/5/2008 2,054.12 6 1.95% $16,760.28 $875,575.64
Buy 7/25/2008 2,014.80 5 4.34% $35,754.67 $858,815.35
Sell 6/20/2008 2,106.30 11 -1.44% -$12,015.91 $823,060.69
Buy 4/4/2008 2,137.05 8 -2.37% -$20,247.91 $835,076.60
Sell 2/8/2008 2,087.63 1 -4.27% -$38,139.98 $855,324.50
Buy 2/1/2008 2,180.72 4 -3.02% -$27,838.07 $893,464.48
Sell 1/4/2008 2,116.76 4 -8.64% -$87,174.59 $921,302.55
Buy 12/7/2007 2,317.05 7 0.88% $8,796.74 $1,008,477.14
Sell 10/19/2007 2,337.62 4 -1.55% -$15,694.71 $999,680.41
Buy 9/21/2007 2,374.32 8 -2.41% -$25,068.00 $1,015,375.12
Sell 7/27/2007 2,318.46 18 -0.28% -$2,934.92 $1,040,443.11
Buy 3/23/2007 2,325.00 3 -4.04% -$43,883.57 $1,043,378.04
Sell 3/2/2007 2,234.80 28 11.96% $116,116.31 $1,087,261.60
Buy 8/18/2006 1,996.13 13 1.26% $12,060.03 $971,145.30
Sell 5/19/2006 2,021.55 27 8.16% $72,355.42 $959,085.27
Buy 11/11/2005 1,869.04 5 -2.27% -$20,583.06 $886,729.85
Sell 10/7/2005 1,827.58 24 9.53% $78,936.49 $907,312.91
Buy 4/22/2005 1,668.58 1 -1.09% -$9,128.07 $828,376.42
Sell 4/15/2005 1,650.59 10 -6.65% -$59,695.26 $837,504.49
Buy 2/4/2005 1,768.24 4 -3.37% -$31,262.83 $897,199.76
Sell 1/7/2005 1,710.64 20 12.20% $100,920.32 $928,462.59
Buy 8/20/2004 1,524.70 5 1.41% $11,533.95 $827,542.27
Sell 7/16/2004 1,546.56 7 -1.85% -$15,375.08 $816,008.32
Buy 5/28/2004 1,575.70 4 -1.56% -$13,212.55 $831,383.40
Sell 4/30/2004 1,551.43 4 -5.60% -$50,079.21 $844,595.95
Buy 4/2/2004 1,643.42 2 -4.82% -$45,273.90 $894,675.15
Sell 3/19/2004 1,567.90 24 13.39% $111,032.57 $939,949.06
Buy 10/3/2003 1,382.69 1 -4.49% -$38,985.92 $828,916.49
Sell 9/26/2003 1,323.25 27 29.61% $198,294.30 $867,902.41
Buy 3/21/2003 1,020.92 8 -0.11% -$749.38 $669,608.11
Sell 1/24/2003 1,019.78 2 -5.97% -$42,590.03 $670,357.49
Buy 1/10/2003 1,084.57 4 -4.21% -$31,314.23 $712,947.52
Sell 12/13/2002 1,040.78 8 9.93% $67,205.10 $744,261.75
Buy 10/18/2002 946.80 5 6.39% $40,665.18 $677,056.65
Sell 9/13/2002 1,011.43 4 -1.67% -$10,828.53 $636,391.48
Buy 8/16/2002 1,028.64 14 17.71% $97,386.94 $647,220.00
Sell 5/10/2002 1,250.05 9 -3.94% -$22,542.25 $549,833.07
Buy 3/8/2002 1,301.30 7 -6.99% -$43,034.41 $572,375.32
Sell 1/18/2002 1,216.25 16 20.34% $104,006.14 $615,409.73
Buy 9/28/2001 1,010.70 15 17.14% $74,826.80 $511,403.59
Sell 6/15/2001 1,219.76 9 7.99% $32,298.72 $436,576.78
Buy 4/13/2001 1,129.52 7 3.76% $14,653.34 $404,278.06
Sell 2/23/2001 1,173.66 11 5.24% $19,390.61 $389,624.72
Buy 12/8/2000 1,115.25 2 -1.82% -$6,847.20 $370,234.12
Sell 11/24/2000 1,095.36 3 -4.24% -$16,692.84 $377,081.32
Buy 11/3/2000 1,143.85 4 -4.33% -$17,808.56 $393,774.16
Sell 10/6/2000 1,096.41 8 -2.39% -$10,094.27 $411,582.72
Buy 8/11/2000 1,123.30 2 -5.39% -$24,018.89 $421,676.99
Sell 7/28/2000 1,065.86 13 0.26% $1,137.38 $445,695.88
Buy 4/28/2000 1,063.14 2 -6.72% -$32,002.24 $444,558.49
Sell 4/14/2000 996.24 4 -4.37% -$21,794.05 $476,560.73
Buy 3/17/2000 1,041.80 7 -5.66% -$29,918.86 $498,354.79
Sell 1/28/2000 985.96 12 0.88% $4,613.21 $528,273.65
Buy 11/5/1999 977.35 13 2.10% $10,753.64 $523,660.44
Sell 8/6/1999 998.28 16 5.03% $24,579.74 $512,906.81
Buy 4/16/1999 950.44 10 -4.75% -$24,346.86 $488,327.07
Sell 2/5/1999 907.35 16 15.41% $68,452.58 $512,673.92
Buy 10/16/1998 786.20 12 14.41% $55,951.41 $444,221.35
Sell 7/24/1998 918.57 3 -3.98% -$16,083.34 $388,269.93
Buy 7/3/1998 956.62 5 -0.65% -$2,629.06 $404,353.27
Sell 5/29/1998 950.48 17 9.37% $34,875.76 $406,982.33
Buy 1/30/1998 869.03 13 -1.96% -$7,445.78 $372,106.57
Sell 10/31/1997 852.31 26 19.00% $60,599.41 $379,552.36
Buy 5/2/1997 716.23 4 -4.82% -$16,154.86 $318,952.94
Sell 4/4/1997 683.29 33 10.69% $32,353.85 $335,107.80
Buy 8/16/1996 617.32 5 -2.36% -$7,332.32 $302,753.95
Sell 7/12/1996 603.06 32 6.86% $19,899.08 $310,086.27
Buy 12/1/1995 564.36 5 -4.80% -$14,644.65 $290,187.19
Sell 10/27/1995 538.49 43 19.00% $48,660.78 $304,831.85
Buy 12/30/1994 452.53 6 -0.08% -$209.80 $256,171.06
Sell 11/18/1994 452.16 14 -0.66% -$1,706.71 $256,380.86
Buy 8/12/1994 455.17 19 -2.09% -$5,516.38 $258,087.57
Sell 4/1/1994 445.84 74 25.06% $52,816.57 $263,603.95
Buy 10/30/1992 356.51 3 -4.87% -$10,793.90 $210,787.38
Sell 10/9/1992 339.95 10 -4.45% -$10,331.12 $221,581.28
Buy 7/31/1992 355.80 6 -4.08% -$9,858.68 $231,912.40
Sell 6/19/1992 341.86 25 5.13% $11,803.54 $241,771.08
Buy 12/27/1991 325.17 4 -4.97% -$12,022.15 $229,967.53
Sell 11/29/1991 309.78 16 -1.55% -$3,819.90 $241,989.68
Buy 8/9/1991 314.67 6 -4.01% -$10,267.11 $245,809.59
Sell 6/28/1991 302.54 32 32.05% $62,152.81 $256,076.69
Buy 11/16/1990 229.11 15 14.73% $24,903.33 $193,923.88
Sell 8/3/1990 268.70 12 -3.75% -$6,579.66 $169,020.56
Buy 5/11/1990 279.16 2 -4.39% -$8,070.49 $175,600.22
Sell 4/27/1990 267.41 6 -4.86% -$9,382.38 $183,670.71
Buy 3/16/1990 281.07 22 3.43% $6,400.26 $193,053.09
Sell 10/13/1989 291.05 41 18.55% $29,205.19 $186,652.83
Buy 12/30/1988 245.51 7 -3.19% -$5,188.33 $157,447.64
Sell 11/11/1988 237.92 5 -3.59% -$6,049.63 $162,635.97
Buy 10/7/1988 246.77 6 -5.06% -$8,994.45 $168,685.60
Sell 8/26/1988 234.88 11 -2.63% -$4,803.59 $177,680.05
Buy 6/10/1988 241.23 3 -6.29% -$12,253.10 $182,483.64
Sell 5/20/1988 226.95 22 13.63% $23,356.40 $194,736.74
Buy 12/18/1987 199.73 13 23.06% $32,117.39 $171,380.35
Sell 9/18/1987 259.60 14 4.47% $5,954.62 $139,262.96
Buy 6/12/1987 248.50 8 -3.77% -$5,223.81 $133,308.34
Sell 4/17/1987 239.47 25 18.87% $21,988.59 $138,532.15
Buy 10/24/1986 201.46 6 -4.05% -$4,918.19 $116,543.56
Sell 9/12/1986 193.62 4 -5.40% -$6,931.89 $121,461.75
Buy 8/15/1986 204.67 4 -2.25% -$2,959.65 $128,393.64
Sell 7/18/1986 200.16 37 23.50% $24,996.24 $131,353.29
Buy 11/1/1985 162.07 11 -0.46% -$490.09 $106,357.05
Sell 8/16/1985 161.33 31 12.90% $12,205.99 $106,847.15
Buy 1/11/1985 142.90 5 -5.07% -$5,058.28 $94,641.16
Sell 12/7/1984 136.00 18 -0.30% -$300.56 $99,699.44
Buy 8/3/1984 136.41 $100,000.00
Start 5/4/1984 137.60

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