Sunday, January 24, 2016

Bullish or bearish? What's your time horizon?

Trend Model signal summary
Trend Model signal: Risk-off
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.

Two views of the market
As the market has been experiencing a high degree of volatility, this week's post will be split into two parts, which reflect the divergent views of my inner trader and inner investor. While my inner trader believes that the markets will be volatile and treacherous for bulls and bears alike, my inner investor thinks that concerns are overblown. Investors shouldn't feel paralyzed like mid-Atlantic Americans are by the Jonas blizzard this weekend, as those fears will all melt away by spring, if not before.

The full post is at our new site here.

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