Developed by Ned Davis, the Four Percent Model is an easy to calculate and easy to analyze market timing tool utilizing the weekly close of the Value Line Composite Index.

A buy signal is generated when the index rises at least four percent from a previous value. A sell signal is generated when the index falls at least four percent.

Utilizing this approach to the stock market during the period from 1993 to 1998 would have a return of 241% versus the buy-and-hold approach which provided a return of 120%.

The Four Percent Model was developed by Ned Davis and popularized in Martin Zweig's book Winning on Wall Street.