Mid-week market update: The S&P 500 is stalling just below its 200 dma after becoming overbought on the 5-day RSI and the percentage of stocks above the 20 dma. What technical pattern is it tracing out? Is it a bull flag (shown by the red lines), or a bear flag (black lines). Bullishness...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
My Trend Asset Allocation Model is a market timing model that has been running since 2013. While the model only issues buy, hold and sell signals for stocks, investors nevertheless need to make their own decisions on how much to buy and sell. Based on my out-of-sample signals, I created a model portfolio by varying...
Mid-week market update: Today's market action has a constructive quality to it. The S&P 500 managed to stage an upside breakout through 5500 resistance and fill the price gap just above that level. The latest development saw the index pulled back to succesfully test the 5500 resistance turned support It's normal to...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Something unusual happened recently. During risk-off episodes, U.S. economic pain has been cushioned by falling bond yields and an appreciating USD, which translates into lower interest rates and more consumer spending power. The risk-off episode that began in early April, which was just after the “Liberation Day” tariff announcements, saw the opposite. The price...
Mid-week market update: It's time to sound the all-clear signal, as least in the short run. Both the S&P 500 and the equal-weighted S&P 500 have decisively staged upside breakouts through the falling trend line. The bulls have regained control of the tape. The next resistance test is the 50% retracement level at...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Ahead of the Second Gulf War, Secretary of Defense Donald Rumsfeld famously referred to “known knowns”, “known unknowns” and “unknown unknowns” when responding to a question about Iraqi weapons of mass destruction. Fast forward to 2025, investors have to contend with a series of known unknowns and unknown unknowns as they consider their investment...
Mid-week market update: Market internals are showing signs of a wash-out. Readings are normalizing after an extreme oversold condition against a backdrop of extreme fear. Stock prices should advance from here. However, the S&P 500 just experienced a "death cross", where the 50 dma falls below the 200 dma. Notwithstanding today's negative surprises from...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Bloomberg’s U.S. chief economist Anna Wong published a chart outlining the impact of Trump’s tariff pivot. Trump raised tariffs on China and cut the “reciprocal tariff rate” to 10% for all others, except USMCA members Canada and Mexico, for 90 days. The resulting weighted tariff rate is not substantially different from the “Liberation Day” rates...
Mid-week market update: Is this Donald Trump's Liz Truss Moment? In the fall of 2022, UK prime minister passed a series of unfunded tax cuts. The bond market rebelled and sold off hard, especially in the long end of the yield curve. The massive sell-off forced a number of "hedged" pension funds into technical insolvency,...
Just a quick update in a day with a fast moving market. Trump's tariffs are eliciting a reaction among key supporters and the real economy. Pittsburgh based Howmet Aerospace, a key supplier to Airbus and Boeing, declared force majeure on its contracts owing to the new tariff regime. Force majeure is a legal practice allows...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
What should investors make of Trump’s “Liberation Day” tariffs, which was characterized as “worst than the worst-case scenario”? Instant analysis from several sources shows that the weighted average tariff rate is now higher than the rates from the Smoot-Hawley era of the 1930s. Trump claims that his tariffs will raise $6 trillion over the next...
Mid-week market update: The market approached Trump's "Liberation Day" tariff announcement all beared up. Trading desk surveys indicate that most retail and institutional market participants had reduced risk coming into the announcement, with outright bears outnumbering the buy-the-dip crowd by 7%. While the ultimate outcome of the Trump tariffs will move markets, there's...
Special Announcement: Humble Student of the Markets will cease publishing a year from now, on March 31, 2026. (This is being published on March 31, 2025 and it is not an April Fools joke). Here's some history. I began writing Humble Student of the Markets in 2007. I had left Merrill Lynch to begin...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Markets were rattled by policy under Trump 1.0 by his unpredictable and chaotic nature. Trump 2.0 promises to be more of the same. Other than the transactional nature of Trump’s deal making, what’s his ultimate end game? It’s to undo the effects of globalization. The political backdrop can be explained by Branko Milanovic’s famous...
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