Financial News
Cautious signs of a bullish revival
February 12, 2023 at 13:21 PM EST
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 Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-E_45URb6esoryg3L1ixQe0_1mX58JjFnxhmDpqx4J1Mb1fM4XihXPOIbyutONnAH8Ss_CcVaixAKP8HbGvV7hU_AKZZ_CWW4ry6yWa36nTD9kM8YKi2sX-bn1XNoo8Oqo6C1lM6ymbRjJfTJbGfQwMMiY45IeSQDz9U8wIIJiXhRe4fbjDWGUdGL-A/w400-h290/Trend%20Model%20perf.png)
My inner trader uses a trading model, which is a blend of price momentum (is the Trend Model becoming more bullish, or bearish?) and overbought/oversold extremes (don't buy if the trend is overbought, and vice versa). Subscribers receive real-time alerts of model changes, and a hypothetical trading record of the email alerts is updated weekly here. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZACRkPSYTP0a7o_Aewq1IEi2MOUG0z683BtPh9eC8LKiFe7qTYTVLGOYDkLJC3gNHM_wK_RwF1kBEp_GJ5yG7GShOQhmkLT-7XgEpwl8y0fJsceYBjEliZlonLw2JLzy1faUDs5JL8idHJ4knvg-v1Bjon5e3AsjCI1v0X79dhOGCde91VzTGJkmA-g/w400-h291/Inner%20Trader.png)
The latest signals of each model are as follows:
Update schedule: I generally update model readings on my site on weekends. I am also on Twitter at @humblestudent and on Mastodon at @humblestudent@toot.community. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.
Subscribers can access the latest signal in real time here.
Can't have a bull market without the bulls
Ever since I turned bullish on equities (see What the bull case looks like), I am seeing signs of a revival in sentiment. Contrarian sentiment analysis is useful, but if you believe this is the start of a new bull, sentiment needs to steadily improve. You can't have a bull market without a steady revival of bullish sentiment. Indeed, the 4-week moving average of AAII bulls-bears and the NAAIM Exposure Index, which measure the sentiment of RIAs managing individual client funds, have bottomed turned up.
The full post can be found here.
The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-E_45URb6esoryg3L1ixQe0_1mX58JjFnxhmDpqx4J1Mb1fM4XihXPOIbyutONnAH8Ss_CcVaixAKP8HbGvV7hU_AKZZ_CWW4ry6yWa36nTD9kM8YKi2sX-bn1XNoo8Oqo6C1lM6ymbRjJfTJbGfQwMMiY45IeSQDz9U8wIIJiXhRe4fbjDWGUdGL-A/w400-h290/Trend%20Model%20perf.png)
My inner trader uses a trading model, which is a blend of price momentum (is the Trend Model becoming more bullish, or bearish?) and overbought/oversold extremes (don't buy if the trend is overbought, and vice versa). Subscribers receive real-time alerts of model changes, and a hypothetical trading record of the email alerts is updated weekly here. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZACRkPSYTP0a7o_Aewq1IEi2MOUG0z683BtPh9eC8LKiFe7qTYTVLGOYDkLJC3gNHM_wK_RwF1kBEp_GJ5yG7GShOQhmkLT-7XgEpwl8y0fJsceYBjEliZlonLw2JLzy1faUDs5JL8idHJ4knvg-v1Bjon5e3AsjCI1v0X79dhOGCde91VzTGJkmA-g/w400-h291/Inner%20Trader.png)
The latest signals of each model are as follows:
- Ultimate market timing model: Buy equities*
- Trend Model signal: Bullish*
- Trading model: Neutral*
Update schedule: I generally update model readings on my site on weekends. I am also on Twitter at @humblestudent and on Mastodon at @humblestudent@toot.community. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.
Subscribers can access the latest signal in real time here.
Can't have a bull market without the bulls
Ever since I turned bullish on equities (see What the bull case looks like), I am seeing signs of a revival in sentiment. Contrarian sentiment analysis is useful, but if you believe this is the start of a new bull, sentiment needs to steadily improve. You can't have a bull market without a steady revival of bullish sentiment. Indeed, the 4-week moving average of AAII bulls-bears and the NAAIM Exposure Index, which measure the sentiment of RIAs managing individual client funds, have bottomed turned up.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6NOhLOQa68Knx6aXw746mUbYQ-RircoF5jZLcpcjK9rETZx5XcFfn_bh4jmXmfmHun3IqGp04Bak7-WnFRiVV2lPJHZ0Dul9PsyxTqoNsIr4U5MLQ1RzpbOjykt2UHFhAcWFQ9JVz4pmY9NuQZyu46YQP-_MiuN-Z5YxE7GIj4tqqMiLwVai9aqEi0Q/w400-h393/SPX%20sentiment.png)
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Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.