The Polaris Prime Version of the Dogs
The screen used by Polaris Prime starts with selecting the 15 highest dividend yielding stocks from the 30 stocks in the Dow Industrials to select its version of the “Dogs of the Dow.” There is a market timing component using both smoothing and exponential moving averages as well as a low relative strength index (RSI). Basically, the timing model is designed to signal a when the general stock market is relatively low or when many buyers think all is lost. If the market timing signal is not indicating a “buy”, then no stocks will be selected.
Sorting and Ranking the Selected Stocks
The 15 stocks selected to be the “Dogs” are then sorted using deep valuation parameters. The top 5 are then become the buy list. They will stay on the buy list until a later weekly selection, sort and ranking drop them off the list; that is they are sorted and ranked as number 6 or lower. Due to the selectivity, sorting and ranking, there may be some weeks where less than 5 stocks make the buy list, but it seldom drops below 5 stocks.
Sell Signals
There are a number of sell signals that can be broken down into several groups. The first group is when the general stock market is relatively high when compared to smoothing and exponential moving averages. The second group is based on taking profits at various percentages, or cutting loses fairly quickly. The third group simply triggers a sell if too much time has passed and none of the other sell signals are triggered.
The Back Testing
The model was back tested using the the 30 Dow Industrials stocks. The model uses only those stocks in the Dow Industrials index and will sell a stock as soon as it is removed from the index and will replace it with a new stock that meets the requirement. The number of stocks and its constituents change from time to time.
Disclaimer
PolarisPrime.com is as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of PolarisPrime.com and any of its authors are not brokers or acting as investment advisers and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person.
PolarisPrime.com and any of its authors does not guarantee that you will out-perform the stock market.
The information provided by PolarisPrime.com and any of its authors is obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness.
At various times, PolarisPrime.com and any of its authors may own, buy or sell the securities discussed for purposes of investment or trading. The author of this model and his family invest and own stocks in this model portfolio.
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Past results are not necessarily indicative of future performance.