Torturing the data until it talks

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.

 

On the other hand, the S&P 500 just experienced a "death cross", where the 50 dma falls below the 200 dma. Notwithstanding today's negative surprises from NVIDIA and Fed Chair Powell, the inability of the index to overcome resistance at the 5500 level, which is the site of the 50% retracement and just below a price gap, is disconcerting for the bulls.

 

 

What happens next? Let's review some historical studies, otherwise known as "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. 

Estimating downside risk

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.

  

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: 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)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

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”

This is an oversold market, but I’ve run out of words to describe “oversold”.

The percentage of S&P 500 above the 200 dma fell below 20% last week, and the percentage above their 50 dma fell below 10% at the same time. These are rare events that have signaled severely oversold markets.
 

Going back to 2002, which is when these data series were available, the market made a final low in about half of these episodes, and re-tested the previous low, sometimes unsuccessfully, in the other half.

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.

A game theory analysis of the trade war

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 and it remains roughly comparable to the tariff rates of the Smoot-Hawley era. More worrisome is the higher tariff rate on consumer goods under the new regime, which spells stagflation, or higher prices combined with lower growth.

 

 
How will the trade war end? Let’s game theory this out.
 

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. 

Trump's Liz Truss moment?

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, which eventually led to the political downfall of the prime minister.

 

Here is where we stand today. The 10-year Treasury yield and other long yields have spiked. The MOVE Index, which is the VIX of the bond market, is up sharply. The yield curve is has marginally recovered from inversion, but nevertheless indicates tight monetary conditions. The trade war factor, which measures the performance of stocks with domestic revenues relative to the S&P 500, has surged.

 

Even as investors fret about how tariffs are affecting the stock market, the real action is in the bond market.

 

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.

 

Force Majeure

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 enabling contracted parties to avoid obligations due to unavoidable or unpredictable external circumstances.

 

This measure is likely just the tip of the iceberg. We will undoubtedly see other signs of economic slowdown in the coming days.

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.

A big bear, or just a plain vanilla correction?

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.

  

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: 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)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

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.

 

Crafting investment policy in an America First world

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 decade, which amounts to the largest tax hike in U.S. history.

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.

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.

Here's what's more important than the tariff announcement

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 something even more important than the announcement.

The full post can be found here.

It's time to hang them up (or the long goodbye)

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 my semi-retirement after starting an investment career in 1985, and personally involved in the stock market since 1980. At the time, I made a decision to slow down and spend more time with my family. In the intervening years, I saw my daughter grow up from a child to a young woman. I was fortunate that life offers such a trade-offs, and I don't regret a minute of that decision. 

 

But I was restless and I still had a passion for the markets. So I started blogging in 2007, and writing regularly was a way of expressing my investment process on paper. It was a labour of love. The blog gained a following and eventually turned into a pay-site in 2015. After 17 years of writing, the labour of love has turned into a grind of producing content three times a week. The game is changing and I am running out of things to say. 

 

I have seen two major shifts of investing paradigm during my investing career. In the early 2000s, I changed my focus from a bottom-up to a top-down quantitative equity investor. By that time, the barriers to entry to bottom-up quant investing had dropped dramatically. When once quant managers had to devote resources to integrate and manage their own databases, services like FactSet offered an all-in-one integrated database. Quant managers were crowding into the same trade. Virtually everyone were building bottom-up sector or industry neutral stock picking models. While your industry mapping may be different from mine, and our estimate revision models may differ, we were all crowding into the same trade. When it cost millions a year of data support to become an equity quant, you could build a quant department for under 500K. I decided that it was time to shift to something uncomfortable for equity quantitative investing. Instead of trying to find alpha in sector/industry neutral modeling, it was time to add value by rotating among top-down factors such as market timing, and sector and factor rotation.

Today, the game is changing once more. A recent Bloomberg article entitled "How Analyst Job Cuts on Wall Street Are Shaping Equity Research" tells the story of how investment banks are forcing analysts to do more with less. Consequently, company coverage is shrinking and some analysts have quit to become content creators on platforms like Substack. This will have the effect of raising stock picking alpha potential among smaller neglected names, and raising small cap volatility, both on an index and individual stock level. The degree of value-added in top-down analysis like what I offer is gradually losing to bottom-up approaches. 

From a top-down perspective, see my recent post, "Uncharted investor waters: From soft to hard power". This is truly a time when "past performance is no guarantee of future returns". We are on the cusp of a tectonic shift in asset return expectations with unknown consequences.

 

As old athletes might say, "It's time to hang them up."

Here is what this means for the site going forward.

For existing subscribers

If you are an existing monthly subscriber, nothing will change until March 31, 2026. If you are an annual subscriber, your subscription will be pro-rated on a monthly basis to March 31, 2026. 

For new subscribers

Only monthly subscriptions will be available. Annual subscriptions will cease.

 

For free notifications

I have a long standing policy of opening content that's four weeks old to the public. That policy will not change. You could sign up for free email notifications of free content.

 

Going forward, free email notifications will cease operation immediately, but the embargo on content will continue to lift after four weeks.

 

Legacy plans

I have secured an agreement with Fred Meissner, of The Fred Report, to continue publishing a monthly commentary on my Trend Asset Allocation Model at his site. Fred is an experienced ex-Merrill Lynch colleague and seasoned technical analyst who focuses on global markets with a particular emphasis on the U.S.. Existing subscribers will receive a free trial to Fred's service for three months starting January 1, 2026. 

 

You can also sign up for a subscription today at Fred Meissner's site and receive a discounted rate with the code CamTrial. His basic subscription is written service listed at $40/month or $400/year. His premium subscription includes the written service and a weekly conference call where subscribers can ask specific questions is $100/month or $1000/year.

 

The website, its archived content, and my email address will remain in existence for at least a year. 

 

For subscribers who are focused on macro style market commentary, here are some other people whose analysis that I have a lot of respect for that you may consider following. (I receive no compensation for these recommendations).

 

Jim Paulsen, Paulsen Perspectives Substack:  Veteran Wall Street strategist with unique out-of-the box insights.

Callum Thomas, Topdown Charts: A big picture macro thinker whose investment process aligns with mine.

Jurrien Timmer, director of macro at Fidelity: You can follow him on X/Twitter here. He also has a weekly newsletter that you can sign up for on LinkedIn.

Thank you for your past support

Thank you to all. It's been a terrific journey together. This will be a long goodbye, but I think a lot about Bill Watterson, the cartoonist who published Calvin & Hobbs, who quit after he ran out of things to say. This was his final comic strip on December 31, 2015.

The message from gold's generational breakout

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.

 

 

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: 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)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

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 Generational Breakout

In case you missed it, the price of gold staged a generational upside breakout relative to both the S&P 500 and the 60/40 balanced fund, as measured by Vanguard’s VBINX (bottom two panels). On an absolute perspective, gold already broke out of a cup and handle pattern at 2100, indicating significant upsid0e potential. From a cross-asset perspective, past breakouts have coincided with periods of severe financial stress.

 The full post can be found here.

Uncharted investor waters: From soft to hard power

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 “elephant chart”. The graph charts percentile of global income distribution, or how rich you are on a global scale, on the x-axis, and the changes in real income between 1998 and 2008 on the y-axis. The winners of globalization were the emerging market countries whose population were lifted out of poverty and the elite of the industrialization countries, who engineered globalization. The losers were population in subsistence economies and the middle class of the industrialized countries, which has sparked populist backlashes such as the Make America Great Again movement, the AfD in Germany, the National Front in France, and so on.

Trump rose to power by tapping on the deep political discontent of globalization of MAGA Americans. Here’s what this means for investors.

The full post can be found here.

A change in market tone

Mid-week market update: The stock market's relief rally arrived this week when the WSJ reported over the weekend that Trump's "Liberation Day" reciprocal tariffs due to be announced on April 2 will be narrowly focused. The S&P 500 rallied to regain its 200 dma. The index pulled back below the 200 dma when Bloomberg reported that "Trump Prepares Auto Tariff Announcement as Soon as Wednesday", though the upside price gap from Monday remains unfilled.

 

 

Despite today's downside reversal, recent trends are emerging that indicate a change in the tone of price action.

 

The full post can be found here.

How to trade the momentum reversal

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.

 

 

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: 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)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

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 Risk-off Reversal

The most recent BoA Global Fund Manager Survey revealed a sudden reversal in risk appetite. Global institutional investors stampeded out of risky assets and rotated from U.S. equities into Europe and China. Most of the selling was concentrated in the U.S. Magnificent Seven, which had been the market leaders. It was a stunning display of a reversal in price momentum.

The full post can be found here.

Making sense of market uncertainty

The latest FOMC statement and subsequent press conference were full of references to “uncertainty”. Most notably, the FOMC statement changed the language related to the Fed’s goals being “roughly in balance” to “uncertainty around the economic outlook has increased”. 

 

 
Not only is uncertainty elevated, but also the risks to inflation, GDP growth and employment have risen in 2025, which increases the odds of stagflation ahead. 

How should investors react to the increase in policy uncertainty?
 

The full post can be found here.

Who's left to sell?

Mid-week market update: Four weeks ago, I rhetorically asked in a post, "Who's Left to Buy?" The BoA monthly Global Fund Manager Survey had shown cash levels at a 15-year low. In addition, a Schwab survey of customer accounts showed cash at similarly historical lows. It was the case of an accident waiting to happen.

 

So the accident did happen as the S&P 500 fell -10% in about three weeks. This month, the Fund Manager Survey showed the sharpest sentiment reversal in five years.

 

Is it time to ask, "Who's left to sell?"

 

The full post can be found here.

Why the market won't crash from here

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.

 

 

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: 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)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

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 Confirmed 5% Canary Warning

The S&P 500 flashed an Andrew Thrasher 5% Confirmed Canary warning last week, which is defined as “the underlying index declines 5% within 15 days from its 52-week high, and closes under 200 dma for two consecutive days”. The signal is based on a research paper that won the 2023 Charles Dow Award.

 
If history is any guide, subsequent drawdowns have been higher than average (green bars).

 
Does this mean it’s time to assume a position of maximum defensive portfolio positioning?

The full post can be found here.

What are the odds of a Trump recession in 2025?

It’s an old political trick. Engineer a recession in your first year and blame it on the previous occupant of the White House. Then take credit for the subsequent recovery.

President Donald Trump and Treasury Secretary Scott Bessent recently rattled the markets with the same message of short-term pain for long-term gain. Bessent began with a CNBC interview outlining the Trump Administration’s intent to shift the source of economic growth from the public to the private sector. He added, “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period.”

In a separate interview, Trump said “a little time” may be needed for his tariff plan to start returning wealth to Americans. He acknowledged that the U.S. economy will undergo some short-term pain and declined to rule out a recession this year: “I hate to predict things like that. There is a period of transition because what we’re doing is very big.” Even more alarming to equity investors, he revealed that he wasn’t as concerned about the stock market as he had been during his first term in office: “Look, what I have to do is build a strong country. You can’t really watch the stock market. If you look at China, they have a 100-year perspective.”
 

So long to the Trump Put.

 
Could this “detox period” result in a recession in 2025? This matters because, as Callum Thomas observed, non-recessionary pullbacks tend to be short and shallow, while recessionary bear markets tend to see drawdowns last longer and deeper.

 
Here is what I am watching.

The full post can be found here.

The anatomy of a pullback, a trader's perspective

Mid-week market update: Everyone calm down. It's not the end of the world. A clear-headed approach is to analyze the roots of the pullback from the perspective of the positioning of different market participants. How each reacted, and what might come next.

 

First, U.S. equities were overvalued. It just needed a bearish catalyst.

 

Here's what happened next. 

The full post can be found here.

High drama at the 200 dma

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.

 

 

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: 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)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

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 test of the 200 dma

The S&P 500 fell last week to test support at the 200 dma. Many elements of a tactical bottom are there, but not all. The 5-day RSI exhibited a bullish divergence and so did the 52-week highs-lows spread. The VIX Index is trading above the upper end of its Bollinger Band, indicating a deeply oversold condition. The only question mark is the lack of an oversold reading on the percentage of S&P 500 above their 20 dma (bottom panel).

 

 The full post can be found here.

Tops are processes

I sounded a warning in late January about a possible long-term market top, based on a negative divergence of the 14-month RSI. It wasn’t a “sell everything” signal, but a cautionary sign of a topping pattern.

 
It is said that “bottoms are events, but tops are processes”. That’s because market bottoms tend to be formed during panic events, while topping patterns tend to be longer-term drawn out. Here is a review of technical and macro backdrop supportive of my topping thesis.

 

The full post can be found here.