The market is finally beginning to exhibit a more typical level of volatility. That’s not surprising, given the emergence of political factors, national and international, that are starting to have an economic impact.

For instance, the recent arrests in Saudi Arabia of large numbers of the elite business and ruling class certainly raise a possibility of internal upheaval that eventually could impact oil production. And missiles fired on Saudi Arabia from Yemen invoke worrisome thoughts of potential damage to Saudi oil fields.

Still, such events have raised less alarm than they would have in days gone by, simply because today the U.S. produces a far larger portion of the oil it needs, making it less dependent on imports.

On the home front, the battle goes on as to what sort of tax package will emerge from Congress, if indeed any emerges at all. Other uncertainties include how the Fed, under incoming head Jerome Powell, will react to whatever comes down the Congressional pike.

In all, the backdrop has become more rife with economic uncertainty, as opposed to mere political uncertainty, than at any time in the recent past. Volatility measures have risen correspondingly. Fortunately, we are heading into a seasonally favorable time, which should help keep the market on an even keel a while longer.

Back to Basics

Now for our indicators. After six months or so of experimentation, we have concluded that we need to get back to the basics, because that works best for us. That means limiting our recommendations – calls or puts – strictly to ETFs and for those of you with futures accounts, to recommendations on buying and selling futures on market sectors and indexes.

It simply hasn’t worked to try to go a step further by betting on an individual stock following a buy or sell signal on an ETF. Our indicators are not designed as single-stock indicators. Our recommendation of Continental Resources (NYSE: CLR) is a case in point. While the trade was not inconsistent with the negative signal from our oil indicators, the stock followed its own path. In the same way, stocks in the S&P 500 can go up or down regardless of how the overall index performs.

Which isn’t to say that none of our stock picks have worked out. We did just fine with Applied Materials (NASDAQ: AMAT) and Suncor Energy (NYSE: SU) as well as with other trades in the past. But overall, when we’ve attempted to use our indicators to do more than what we constructed them to do, which is to forecast the direction of ETFs, we’ve been disappointed with the results.

Therefore, going forward, we are returning to our roots and will stick to puts and calls on ETFs. To keep things exciting, though, we will attempt to develop a broader range of ETFs on which to make recommendations.

For the record, if we single out our ETF recommendations, we have been correct on 30 out of 36. In all due modesty, that’s an exceptional performance, since the probability of making money on any particular call or put is around 30 percent or below.

To further quantify the record, we constructed a hypothetical situation in which followers of our indicators take whatever money they want to dedicate to options speculations and invest one-third of that sum in any recommendation we make. This would imply, of course, that we never have more than three recommendations at any given moment. For the purposes of computing longer-term portfolio gains, the gain or loss in any recommendation should be divided by three, reflecting results for your portfolio based on that trade.

Going back to the start of 2016, when we began using these indicators, we found that following this system for the 36 recommendations we’ve made since then and compounding the gains (and losses), our options would have advanced more than fourfold, for an annualized gain of more than 100 percent. (For anyone who wants to check these claims, the trades are listed and we have scanned pictures of entry and exit points.)

The reason I’m going into such detail isn’t to brag. Rather it’s to explain that while we realize some subscribers are hungry for more action, we can’t provide it in good faith because it has turned out that more action is inconsistent with the mission of this publication, which is to use our indicators for maximum gains.

Of course, we’re well aware, and you should be too, that our past results don’t guarantee comparable results in the future. But we have confidence that as long as we use our indicators in the way we intended, you will come out well ahead and of course we will be constantly striving to generate the greatest returns for you. In the near future we expect our indicators will be giving us the go-ahead to initiate trades, most likely in oil (negative), bonds (positive), or perhaps stocks (still negative).