A flock of hawks circle Wall Street

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...

A pending major market bottom? It sounds too easy!

Is the universe unfolding as it should? Most technical and sentiment indicators argue for a near-term double bottom in the S&P 500. The June bottom was the initial capitulation bottom. The market rallied and it is poised to weaken and re-test the old lows in the near future. That's when the new bull begins.  ...

How I learned to stop worrying and love the bond market

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...

Assessing “Big Short” Michael Burry’s crash warning

A number of readers asked me to comment on Michael Burry's forecast of a crash, according to a report from Business Insider. Doomsday is finally here, he hinted in a since-deleted tweet this week.   The fund manager of "The Big Short" fame shared a screenshot of a S&P 500 chart, showing the benchmark stock-market...

Saved by Fibonacci

Mid-week market update: I suggested on the weekend that the stock market was oversold and poised for a short-term rally (see How to trade the failed breadth thrust). The rally seems to have arrived.   The weakness in the S&P 500 has been stunning as it sliced through multiple levels of support like a hot...

How to trade the failed breadth thrust

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...

Jackson Hole turbocharges the FOMC market cycle

Mid-week market update: The stock market has mostly followed an FOMC cycle where prices decline into an FOMC meeting and rallied afterward. While the Jackson Hole symposium wasn't an FOMC meeting, it nevertheless seems to have sparked market weakness.      After the S&P 500 stalled and pulled back at its 200 dma, I thought...

Six reasons why this was just a bear market rally

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...

Short covering rally is over, now waiting for Powell

Mid-week market update: According to Goldman Sachs, systematic hedge fund positioning has reversed from a crowded short to a crowded long. Readings are similar to the levels seen at the market top in late March.      The S&P 500 stalled at 200 dma resistance. In light of this analysis of HF positioning, the bulls...

Just a flesh wound, or a deeper cut?

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...

“Price leads fundamentals”, or “Don’t fight the Fed”?

Wall Street is full of adages. Technical analysts are fond of, "Price leads fundaments" as a way of dismissing macro and fundamental analysis. But traders are also warned, "Don't fight the Fed".    A vast gulf is appearing between bullish technicals and macro concerns. The bulls, who are mainly technicians, point to strong price momentum,...

Overhead resistance test = Possible weakness ahead

Mid-week market update; The S&P 500 has undergone a powerful rally off June's bottom, but it's now approaching technical resistance in the form of a 200 dma and a falling trend line. In addition, the market is overbought as measured by the 5 and 14-day RSIs, much in the manner of early November 2021.  ...

A warning from a market leadership review

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...

Lessons from a study of past major market bottoms

The mood has changed on Wall Street. The WSJ declared last week that the NASDAQ is back in a bull market.     The number of "new bull market" stories have skyrocketed in recent days. Suddenly, chartists on my social media feed are full of "if this index rises to X, or this indicator gets...

A useful step, but where`s the clear and convincing evidence?

Mid-week market update: The markets took on a risk-on tone in the wake of the softer than expected CPI report. It was a useful first step and a possible sign that inflation is peaking, but I am still waiting for the "clear and convincing evidence" that inflation is under control before getting overly excited about...

The overlooked reason why the market is so strong

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’s “Black Swan” in Chinese?

Mid-week market update: Here we go again. Just when you thought world events were under control, House Speaker Nancy Pelosi's visit to Taiwan raised the geopolitical risk premium.     And just as I predicted on the weekend (see In what world is fighting the Fed a good idea?), we've had a cacophony of Fed...

In what world is fighting the Fed a good idea?

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...

Bearishness begone!

The returns of my Trend Asset Allocation Model have been strong. Based on an "out of sample" record of signals from 2013 and a simulated portfolio that varies up to +/- 20% from a 60/40 benchmark, the model portfolio has managed to achieve equity-like returns with 60/40-like risk. Performance has also been consistently positive in...