Sunday, December 6, 2015

2016: Time to get bearish and go "Zero Hedge"?

Trend Model signal summary
Trend Model signal: Neutral
Trading model: Bullish

The Trend Model is an asset allocation model which applies trend following principles based on the inputs of global stock and commodity price. In essence, it seeks to answer the question, "Is the trend in the global economy expansion (bullish) or contraction (bearish)?"

My inner trader uses the trading model component of the Trend Model seeks to answer the question, "Is the trend getting better (bullish) or worse (bearish)?" The history of actual out-of-sample (not backtested) signals of the trading model are shown by the arrows in the chart below.

Update schedule: I generally update Trend Model readings on my blog on weekends and tweet any changes during the week at @humblestudent.

My worries for 2016
As the above chart shows, I have been pretty bullish on equities since the market bottomed in September. However, as I peer into 2016, ominous signs are starting to appear. For my inner investor, the key question is whether to go full "Zero Hedge" and turn bearish on the outlook for 2016. Here is my list of worries:

The full post is at the new site here.

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