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.
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.
The latest signals of each model are as follows:
- Ultimate market timing model: Sell equities*
- Trend Model signal: Neutral*
- Trading model: Bullish*
Update schedule: I generally update model readings on my site on weekends and tweet mid-week observations at @humblestudent. 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.
Still constructive Last week, I outlined seven reasons why traders should grit their teeth and buy. I reiterate my short-term bullish and intermediate-term cautious view of the stock market. Traders should continue to buy now, but be prepared for pain later.
The S&P 500 rallied strongly early in the week but gave up most of its gains as time passed. Friday's hot NFP report cratered stock prices and the index traced out a bearish island reversal, which is clearly visible on the hourly chart. The good news is the S&P 500 has nearly reached the measured downside target of its reversal pattern. In addition, the last hour was characterized by a morning star doji candle, which is a possible reversal pattern that needs to be confirmed by market strength Monday morning.
The full post can be found here.
