Wednesday, May 14, 2025
From Fear to Greed
Sunday, May 11, 2025
A Sector and Factor Review of Market Internals
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.
- Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
- Trend Model signal: Bearish (Last changed from “neutral” on 11-Apr-2025)*
- Trading model: Neutral (Last changed from “bullish” on 14-Apr-2025)*
Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. 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.
A Leadership Review
The recovery of the S&P 500 off the “Liberation Day” downdraft seems to be stalling just below the 200 dma. A review of value and growth leadership shows that the rebound was led by growth stocks, both on a global basis and across all market cap bands.
Does that mean the rally is vulnerable to a setback in growth names? We review the character of market leadership to answer that question.
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Saturday, May 10, 2025
Why the Detox Isn't Over
I don’t think so.
The stock market isn’t the economy, but it is nevertheless related to the economy. Investors need to distinguish between the likely economic effects of events and the market reaction to the events. The initial VIX spike to over 60 in the wake of the “Liberation Day” announcement was consistent with the blinding end-of-world fear that occurs at market bottoms. Usually, the subsequent bottom has been accompanied by the reduction or elimination of tail-risk by policy makers. This time, the tail-risk of a recession is very real and there are no signs of significant policy mitigation.
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Wednesday, May 7, 2025
The Eyes of the Beholder
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Sunday, May 4, 2025
Trust the Thrust, or Sell in May?
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.
- Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
- Trend Model signal: Bearish (Last changed from “neutral” on 11-Apr-2025)*
- Trading model: Neutral (Last changed from “bullish” on 14-Apr-2025)*
Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. 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.
Buy and Sell Signals
The S&P 500 made an impressive recovery off the trade war panic sell-off. The market regained the 50 dma and it stands above “Liberation Day” levels, though the index is overbought and it is encountering a zone of resistance.
Along with the market recovery, I am seeing a resurgence of momentum-driven buy signals, or at least constructive signs for stock prices. Against that, the stock market is also facing a number of bearish headwinds, such as the “Sell in May” negative seasonality influence.
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Saturday, May 3, 2025
A Trend Model update: Still cautious
The risk-adjusted returns of the model portfolio are strong. The model has beaten the 60/40 benchmark on 1, 2, 3 and 5-year time horizons, as well from inception for the period from December 31, 2013 to April 29, 2025. In addition, it was able to achieve these returns with controlled risk, equivalent to roughly an 85/15 stock/bond asset mix with 60/40 risk. As the dotted line in the chart depicting relative performance shows, the model mainly reached the superior risk-adjusted returns by sidestepping the really ugly bear markets over the study period.
- 1 year: Model 9.5% vs. 60/40 8.7%
- 2 years: Model 13.3% vs. 60/40 11.4%
- 3 years: Model 9.6% vs. 60/40 7.7%
- 5 years: Model 10.9% vs. 60/40 9.0%
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Wednesday, April 30, 2025
A ZBT buy signal update
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Sunday, April 27, 2025
4 reasons to be cautious about the ZBT buy signal
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.
- Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
- Trend Model signal: Bearish (Last changed from “neutral” on 11-Apr-2025)*
- Trading model: Neutral (Last changed from “bullish” on 14-Apr-2025)*
Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. 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.
A ZBT Buy Signal
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Saturday, April 26, 2025
An American Emerging Market crisis?
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Wednesday, April 23, 2025
Sounding the all-clear, but for how long?
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Sunday, April 20, 2025
60/40 in an era of American Unexceptionalism
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.
- Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
- Trend Model signal: Bearish (Last changed from “neutral” on 11-Apr-2025)*
- Trading model: Bullish (Last changed from “neutral” on 28-Feb-2025)*
Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. 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.
Threats to the 60/40 Portfolio
What can investors do under such circumstances?
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Saturday, April 19, 2025
Known unknowns, and unknown unknowns
- What are the objectives of Trump’s negotiations and how far is he willing to go?
- When will the chaos subside enough that companies can plan and respond to the changes in tariff regimes?
- Will the U.S. economy fall into recession?
- Have the USD and Treasury securities permanently lost their position as safe havens?
- How much damage has been done to the post-World War II security and financial architecture?
Wednesday, April 16, 2025
Torturing the data until it talks
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Sunday, April 13, 2025
Estimating downside risk
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.
- Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
- Trend Model signal: Neutral (Last changed from “bullish” on 15-Nov-2024)*
- Trading model: Bullish (Last changed from “neutral” on 28-Feb-2025)*
Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. 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.
Out of Words to Describe “Oversold”
What’s the prognosis? What’s the market’s downside risk?
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Saturday, April 12, 2025
A game theory analysis of the trade war
Wednesday, April 9, 2025
Trump's Liz Truss moment?
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Monday, April 7, 2025
Force Majeure
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Sunday, April 6, 2025
A big bear, or just a plain vanilla correction?
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.
- Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
- Trend Model signal: Neutral (Last changed from “bullish” on 15-Nov-2024)*
- Trading model: Bullish (Last changed from “neutral” on 28-Feb-2025)*
Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. 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.
The Big One?
In light of the market’s negative surprise from Trump’s tariff announcement, the key question for investors is whether the latest pullback is just a plain vanilla correction or the Big One, which signals the start of a recession-induced bear market. As the accompanying chart shows, the S&P 500 experienced average intra-year drawdowns of -14.1%, compared to the current pullback of -17.4% so far.
How worried should you be?
The full post can be found here.
Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.
Saturday, April 5, 2025
Crafting investment policy in an America First world
I pointed out last week that Trump’s abrupt shift in U.S. policy is making the world undergo a dramatic regime shift in investment environment (see Uncharted Investor Waters: From Soft to Hard Power). The key big picture question is how investors should formulate investment policy under these new circumstances.
Wednesday, April 2, 2025
Here's what's more important than the tariff announcement
The full post can be found here.