The goal is to use cash as part of your overall portfolio, adjusting equity holding size during the year based on Macro valuations.
The model isn't a crystal ball. Trade signals are based on Probabilities and Statistical methods, producing different trades with differing probability of success. Overall, model is right 2 out of 3 trades.
The model is not a HFT or intraday scalping algorithm, only changing the position about 2-3x a month, on average. The model is a pure directional bet on whether the SP500 will rise or fall, which during bull or bear markets, is able to profit from not only the major trend but also sell into the minor counter-trends. The result is a system designed to beat the SP index by profiting when the market loses during pullbacks.
One could create a hedged strategy where Shorting SP is utilized, which makes profits possible during a market decline. This hedge fund approach is best combined with another long-only portfolio. This Long/Short 100% version of the model is employed by the firm's commodity pool.
Another option is to supplement the long-only strategy, using the model to change equity weighting allocations, making better timed buys and sells. Scaling between 0% long to 200% long at MAX BULL. Selling means taking profits, not shorting the market.
The graph shows 1999-2012 backtesting results of the Long-Only 200% model theory as compared to passive index investing in the SP500.