It's Friday. The end of the week. This seems like an appropriate day to put a wrap on this impromptu series of articles about timing the market based on the direction of interest rates. The two previous articles are linked below.

In this article series we've been looking at past performance of the Dow Jones 30 Industrials as they relate to the Federal Reserve Target Funds Rate. The theory, proposed a very long time ago by a friend, suggested that investors should buy when the Fed begins reducing rates and sell when the Fed begins raising them. The theory behind this rudimentary market timing system holds that easy money allows for market expansion and growth, which in turn means higher stock prices. Conversely, rising interest rates put the brakes to growth and hold stock price appreciation back.

Yesterday we took a brief look at whether a change in the direction of interest rates was an indicator of whether you should buy or sell stocks. The theory says that when interest rates - in this case we're watching the Fed Funds Target rate - are falling, money becomes cheaper. Less expensive debt allows corporations to borrow more aggressively and in turn expand more rapidly. Conversely, when interest rates are on the rise stocks will fall because credit is tight and expansion is more difficult.

A long time ago, when the thought of being a Millionaire was only a far away dream, I had a friend who told me his theory for when to invest in what kinds of securities. His buy and sell triggers had only to do with what was happening with interest rates. His theory was simple: You should be buying stocks when the Fed Funds Rate is dropping. When rates top out and start to drop it's time to sell and move to cash or to bonds.

His theory was based on the premise that a lowered Fed Funds Rate meant more liquidity, which would lead to higher stock prices as businesses were able to obtain money for expansion more cheaply. Conversely, when money's getting tighter, businesses find it harder to borrow. Debt is more expensive, making expansion harder to finance. Without expansion, businesses and their stock prices don't grow.