A Probable Failed Zweig Breadth Thrust

Mid-week market update: I noticed on the weekend that there was a lot of excitement over the possibility of a Zweig Breadth Thrust buy signal, probably because of the strong advance last week. The stock market consolidated this week, and while the ZBT window closes Friday, the degree of breadth strength to achieve a ZBT is becoming a mathematical impossibility.

 

The market remains at a crossroad between bullish and bearish outcomes, but the prognosis is becoming more promising for the bulls.

The full post can be found here.

At A Crossroad

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Bullish (Last changed from “neutral” on 18-Nov-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.

Where to from Here?

I made a strong case last week that the market was oversold, washed-out and due for a bounce. It was therefore unsurprising that the S&P 500 staged a relief rally. The index recovered above its 50 dma and it’s now testing its rising trend line.

The key question is, where do we go from here?
 

The VVIX Index, which is the volatility of the VIX, fell below the key 100 level. Such instances have been short-term bullish in the past year (marked by vertical lines), though there are no guarantees that the rally will continue. On the other hand, the advance left the index extended and it may be forming the right shoulder of a head and shoulder formation. With the caveat that H&S patterns are incomplete until the neckline breaks, this is potentially a bearish development that could see stock prices weaken further.

The market is at a crossroad. Here are the bull and bear cases.

The full post can be found here.

What Investors Should Be Thankful For

As Americans recover from their extended Thanksgiving feasts, they were faced with the news of skidding consumer confidence. The Conference Board’s Consumer Confidence Index weakened to levels just above the lows seen during the post-COVID expansion.

 
The University of Michigan’s Index of Consumer Confidence, which was released in early November, was even worse.

Before turning too bearish, investors should be thinking about the silver linings in this dark macroeconomic cloud of weak consumer confidence. The S&P 500 is near record highs this Thanksgiving and there are several things that equity investors should be thankful for.

The full post can be found here.

How to Trade the AI Panic

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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 Letdown from the NVIDIA Party

The sense of disappointment was palpable. After the AI market leader reported its earnings, which beat expectations, CEO Jensen Huang characterized demand for its Blackwell chip as “off the charts”. The stock rallied but sellers appeared and pushed the broad market down.

A reader characterized Thursday’s market action as, “NVIDIA threw a party but nobody came”. Even before the NVIDIA report, sentiment had been deteriorating. While the Fear & Greed Index is an imperfect sentiment and market timing indicator, its readings have fallen to levels last seen during the “Liberation Day” panic in April. The key difference is fundamentals. The market weakness in April was attributable to fears that global trade might seize up and economic growth may crater. Today’s market weakness is driven mostly by psychology and not a significant change in fundamentals. Should you be stampeding to the exit because some investors are taking profits?
 

I believe sentiment has fallen to levels consistent with a tactical bottom.

 
 The full post can be found here.

Is it all over for growth stocks?

Is it all over for artificial intelligence-related plays? AI market leader NVIDIA reported stronger-than-expected quarterly results, and CEO Jensen Huang characterized demand for its Blackwell chip as “off the charts”. The stock staged a brief reflex rally but the price faded the next day to close in the red.
Even as the market adopted a risk-off tone, market leadership showed a clear growth to value rotation across the board on all market cap bands and internationally. Is it all over for growth stocks?

 
I analyzed the market through the lens of leadership rotation, and here’s what I found.

The full post can be found here.

Why I am hoping for an NVIDIA wipeout

Mid-week market update: I am publishing the mid-week market update early for two reason. I wanted to respond to the recent market turmoil. And I have a dental appointment just after the market close so this will be in your inbox early.

 

The markets have taken a sudden risk-off tone in the last few days. Growing concerns about valuation and skepticism about the AI revolution is feeding those worries. Bloomberg published an article with the catchy headline "Stocks Face Sell Signal as Cash Holdings Drop in BofA Survey":

Investors’ cash positions dropped below a critical threshold in a monthly Bank of America Corp. survey, triggering a so-called sell signal for equities at a time of rising doubts around lofty technology valuations.

The average cash held by global fund managers fell to 3.7%, something that has only occurred 20 times since 2002. Stocks declined and Treasuries outperformed in the following one-to-three months each time that happened, strategist Michael Hartnett wrote in a note.

The big sources of volatility this week is the NVIDIA earnings report Wednesday after the close, followed by the much delayed October Payroll Report Thursday morning.

As the market turmoil continues, I am hoping for a wipeout from the NVIDIA report, as that could represent the wipeout market low which represents a buying opportunity.

 

The full post can be found here.

Buy the Dip For the Year-end Rally

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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.

Consolidation and Test

The S&P 500 ended an upper Bollinger Band ride weakened to the 50 dma support level. Past pullbacks in the most recent bull trend have ended when the 5-day RSI became oversold. As expected, the market rebounded and it has begun to consolidate sideways. If history is any guide, investors should see an upside breakout through the consolidation range in the next few days. I would look for the VVIX, or the volatility of the VIX, to decline below 100 as an bullish all-clear signal.

 
Stock prices are on track for a rally into year-end.

The full post can be found here.

Can the Bulls Survive a "Let Them Eat Cake" Economy?

There has been increasing concern about the K-shaped economy. Fed Chair Powell specifically addressed this issue at the last post-FOMC press conference:

To start with the layoffs, you're right, you see a significant number of companies either announcing that they are not going to be doing much hiring, or actually doing layoffs, and much of the time they're talking about AI and what it can do. So, we're watching that very carefully…On the K-shaped economy thing, I would say the same thing, or similar thing. We are —- if you listen to the earnings calls or the reports of big, public, consumer-facing companies, many, many of them are saying that there’s a bifurcated economy there and that consumers at the lower end are struggling and buying less and shifting to lower cost products, but that at the top, people are spending at the higher income and wealth, and they’re — so much, much anecdotal data on that.

Investors are seeing a bifurcation in consumer sentiment. Sentiment of households with incomes over $100,000 are at or near a cycle high, while sentiment for households making below $100,000 are plunging in 2025.

This is setting up to be a “let them eat cake” economy. While the stock market isn’t the economy, can the bull market survive such a bifurcation if most U.S. consumers are struggling?
 

The full post can be found here.

With flying colours?

Mid-week market update: My market analysis publication published on the weekend ended with the following:

The S&P 500 ended an upper Bollinger Band ride last week and weakened to the 50 dma support level. Past pullbacks in the most recent bull trend have ended when the 5-day RSI became oversold. Next week’s market action will be a key test of the market uptrend.

The bulls seem to have passed with flying colours. The S&P 500 bounced off its 50 dma, and the market rallied off the 5-day RSI oversold reading. Stock prices were ready to bounce, and news of a deal to reopen the government was the catalyst.

 

 

There is, however, one crucial detail. The VVIX, which is the volatility of the VIX, remains above the 100 level, indicating heightened market anxiety. It may be too early to sound the all-clear until VVIX weakens below 100.

The full post can be found here.

The Challenges of Narrow Breadth

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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 Magnificent Seven Market

I have heard many concerns from chartists in the past few months about the narrow nature of breadth in the U.S. equity market. Today, the Magnificent Seven dominate market leadership while the equal-weighted S&P 500 lag the cap-weighted index.
 

I am reminded of Bob Farrell’s Rule #7: “Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names”; and Rule #3: “There are no new eras—excesses are never permanent”.

How worried should investors be?
 

The full post can be found here.

Peering into 2026: Prepare for Momentum Tailwinds

My former colleague Fred Meissner revealed a disturbing contrarian warning in a recent weekly commentary: “The most concerning story: recently I was on a panel for the CFA Society of San Francisco. All three analysts had the same outlook, which is my base case – a yearend rally followed by problems in the first part of 2026.”

It seems that everyone is looking for a rally into year-end, followed by weakness in the new year. Here is where I differ from that consensus. I believe the stock market should rally into year-end, followed by continued bullish tailwinds, at least for the first half of the year.

 

My long-term market timing model remains on a buy signal. As a reminder, this model flashes a buy signal whenever the monthly MACD of the NYSE Composite (bottom panel) turns positive and sells whenever the 14-month RSI flashes a negative divergence.

The bull is alive, and it’s helped by three major tailwinds going into 2026, namely a stimulative monetary policy, a stimulative fiscal policy, and strong price and fundamental momentum.

The full post can be found here.

The Real Reason the Market Skidded Yesterday

Mid-week market update: I noted on the weekend that the S&P 500 was at the end of a upper Bollinger Band ride, and such instances usually resolve in consolidation or pullbacks. In the past, the pullback usually ended at the 20 dma, which is roughly where the market is today. In other cases, market weakness continued until the index reached the lower BB.

 

 

Is the pullback over? To answer that question, I turn to the catalyst for market weakness. I woke up Tuesday morning to see a sea of red in equity market indices. The spark was attributable to a decline in the shares of go-go stock Palantir, which reported sales and earnings beats and guided expectations higher. Apparently, it wasn't enough. The market sold off because of Palantir's sky high valuation.

 

I found the explanation vaguely unsatisfying. Here is the real reason.

The full post can be found here.

Prepare for the Year-End Rally!

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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.

 

Risk Appetite Normalization

Last week, I observed that the stock market was on the verge of a buy signal. I got that signal this week when the VVIX, or the volatility of the VIX Index, dipped below 100 after a spike. This is a signal of reduced market risk appetite anxiety, which sets the stage for a market advance. In the meantime, the S&P 500 has been rising in a well-defined channel.

The full post can beo fund here.

Making Sense of the Gold Price Retreat

I received considerable feedback to last week’s publication, Ready for the Contrarian Gold Trade? I suggested that while gold remains in a long-term bull market as the market is transitioning to a hard asset cycle, gold prices are due for a multi-month period of consolidation and pullback much like the 2004–2006 episode.

Further discussions with readers prompted us to offer an alternative scenario of a shorter corrective period. Investors may not have to wait 1–2 years before the resumption of a gold bull.

The full post can be found here.

One Down, Two to Go

Mid-week market update: My former Merrill Lynch colleague Fred Meissner of The Fred Report wrote on the weekend that "the yearend rally has started, and a trend following indicator...we primarily use for risk management to show that trends have turned positive on key indexes". From a purely technical perspective, I agree. The S&P 500 has begun an upper Bollinger Band ride. Past upper BB ride episodes has seen the index advance further, followed by a period of consolidation and mild pullback.

 

Is the pause in the advance in stock prices the end of the upper BB ride that signals an imminent pullback and consolidation? In the short run, there are three sources of volatility for the stock market. We just had the Fed decision today. This week, we will see several Magnificent 7 stocks report earnings. In addition, the market will see the results of the Trump-Xi meeting.

 

The full post can be found here.

Time to Sound the All-Clear?

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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.

 

On the Verge of a Buy Signal

Ever since the NYSE McClellan Summation Index (NYSI, bottom panel) broke support on the weekly chart, I warned that the stock market was at risk of a pullback. Indeed, stock prices did briefly weaken, but they have rallied and begun to consolidate sideways. In addition, NYSI has begun to turn up. Is the pullback over?

 

The answer to this question can be found in the 14-week RSI (top panel), which ended the week just shy of the 70 overbought level. In the last five years, the market has continued to rally whenever the RSI returned to an overbought, which I call a “good overbought”, condition. The episodes when stock prices continued to weaken were accompanied by falling RSI readings.

 

I am seeing signs of constructive healing in market internals and I am on the verge of a buy signal, but it may be too early to sound the all-clear just yet.

The full post can be found here.

Ready for the Contrarian Gold Trade?

I have been a gold bull for quite some time. I highlighted its bullish potential in early 2024 when it staged an upside breakout to an all-time high at 2100. Last November, I reiterated my bullish view with the publication, 2025 High Conviction Idea: Gold. Since then, gold prices have gone parabolic and soared to new highs in all major currencies, including the Swiss Franc, which is considered to be a “hard currency”.

 
It may be time for a pause. If you are ready to be a contrarian on gold, the tactical contrarian trade here would be to sell gold and buy bonds.

The full post can be found here.

Drawing Lines in the Sand

Mid-week market update: As the bulls and bears battle it out during this phase of consolidation, it's time to set out some lines in the sand to see which side has the upper hand. The accompanying chart shows the S&P 500, the equal-weighted S&P 500, and the Russell 2000, along with their respective rising trend lines (dotted lines), their 50 dma, and levels of likely support.

 

 

Here are my takeaways:

• The S&P 500 and equal-weighted S&P 500 are testing their rising trend line while the Russell 2000 has been below the trend line for several sessions.
• All three indices are trading just above their 50 dma initial support.
• The S&P 500 can find decent support at about the 6500 level, and the equal-weighted S&P 500 and Russell 2000 are very close to their 50 dma and secondary support levels. Violations of those support levels opens the door to deeper price weakness.

In other words, there are few clear signs of bullish or bearish dominance.

The full post can be found here.

It's Not Over Until the Iron Lady Sings

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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 Trade War Continues

Even as the S&P 500 tests its rising trend line after the sudden trade war-related shock, we believe the risk of further stock price downdrafts isn’t over. The VVIX, or the volatility of the VIX Index, spiked above 100, indicating elevated levels of anxiety. If history is any guide, such conditions have seen market volatility and price pullbacks. 

By no means is the trade war over. Here are some reasons why.
 

The full post can be found here.  

A Fragile Bull

While I am intermediate-term bullish on stocks, I am also increasingly concerned about the narrowness of market leadership. Market leadership continues to be concentrated in the Magnificent Seven, as the equal-weighted S&P 500, which represents the average stock, lags the index. 

Here is what this means from top-down macro and a chartist’s viewpoints.

The full post can be found here.

Are the Bulls Back in Town?

Mid-week market update: The stock market has seen a remarkable recovery. After a -2.7% wipeout on Friday, the S&P 500, the equal-weighted S&P 500, and the Russell 2000 all recovered back above their rising trend lines.

Are the bulls back in town?

The full post can be found here.

The Return of Tariff Man

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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 Bearish Trigger?

The trade truce was too good to be true. That all changed last Friday when President Trump upended the trade truce in response to heightened Chinese control on exports with rare earth elements. Trump threatened higher tariffs on China in a Truth Social post. He added, “I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so.” Later in the day, he announced an additional 100% tariff on Chinese exports on top of the current 30% duty and added export controls on critical software. 

Even though my trade war factor had been signaling rising anxiety since early August as U.S. companies with domestic revenues were leading the equal-weighted S&P 500, implied stock and bond volatility (bottom panel) had been tame for months. To be sure, tariffs were starting to bite, but most trade partners declined to retaliate. Implied volatility readings were in the “Assertive Trump” zone. It was only a matter of time before Trump spent some of the built up political capital to assertive his authority.

Stock prices were rattled by the news. I had been warning for weeks that the market is extended and could pull back at any time. Is this the bearish trigger?

 

 The full post can be found here.

The AI Bubble Debate

Are we in an artificial intelligence investment bubble? That’s becoming the narrative in the financial media. A search on Bloomberg for “AI bubble” showed elevated number of stories, with a peak in January 2025 after the news of the DeepSeek breakthrough.

 
In practice, what does that mean for equities, and the economy?

 

The full post can be found here.

It's a little too quiet out there

Mid-week market update: As the stock market grinds upward, I am seeing different variations of "it's a little too quiet out there" warnings from market analysts. One example is the growing gap between the implied volatility (IV) of the S&P 500 and the historical realized volatility (HV).

 

Eventually, something has to give. It usually ends with a spike in IV, or VIX, which has an inverse relationship with stock prices.

 

The full post can be found here.

The Valuation Challenge to Stock Prices

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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.

 

Nosebleed Valuations

The S&P 500 ended September trading at a forward P/E of 22.8, which is the highest level this century. Other valuation indicators are also showing elevated readings compared to their long-term averages. How worried should U.S. equity investors be? 

The full post can be found here.

How Miran''s Can Opener Transforms the Fed

The September FOMC meeting concluded with the Fed opting for a quarter-point rate cut. Newly appointed Fed Governor and Trump ally Stephen Miran dissented and voted for a half-point cut. More astoundingly, the dot plot showed an outlier calling for a Fed Funds rate below 3% in 2025, which requires 1.25% in rate cuts over the next two meetings. While the dots are anonymous, the mostly likely source is Stephan Miran.

Fed Chair Powell described monetary policy in a recent speech as “no risk free path” because of the upside risks to inflation and downside risks to employment. How can Miran justify his off-the-charts level of dovishness against this economic backdrop?

The full post can be found here.

Waiting for the Next Market Shoe to Drop

Mid-week market update: Even as the equal-weighted S&P 500 touched another all-time high today, it was a marginal upside breakout.

 

 

Here are the bull and bear cases for the near-term outlook.

 

The full post can be found here.

Get Ready to Buy the Dip, But Not Yet

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: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 31-Jul-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.

 

Is That All There Is?

In the past few weeks, I have been warning about the short-term vulnerability of the stock market’s advance. I cited numerous cases of negative divergences. Last week, the S&P 500 printed three consecutive red days before reversing on Friday. It’s unclear whether this was the start of a correction, as the equal-weighted S&P 500 remains above resistance turned support. However, the pullback briefly left it oversold on the NYSE McClellan Oscillator (NYMO). 

You can nevertheless feel the tone of market psychology changing. Enthusiasm over the prospect of further Fed rate cuts has moderated, and geopolitical risk premium has risen in the wake of Ukrainian strikes on Russian oil facilities and European threats to Russia. If this is the long-awaited pullback, is that all there is? How bullish or bearish should investors and traders be?

 

The full post can be found here.

The Climate Change Threat to Productivity

This is the third in a series of the opportunities and threats to productivity. This week, I address the issue of climate change (also see AI Productivity and the Promised Land and Will America get old before it becomes Great Again?).

The World Health Organization recently issued a joint report with the World Meteorological Organization that quantified the effects of extreme heat on productivity. It warned that “Extreme heat is fast becoming one of the biggest threats to workers’ health and livelihoods…worker productivity drops by 2 to 3 per cent for every degree above 20°C (68°F). The health consequences are wide-ranging, including heatstroke, dehydration, kidney dysfunction and neurological disorders. Overall, nearly half of the world’s population is now experiencing negative effects from high temperatures.”

The Network for Greening the Financial System (NGFS) issued a report that modeled different scenarios of climate change and mitigation policies on global GDP growth. I would make two points about these projections. Investors should approach GDP and productivity forecasts with some humility. Models of temperature change and GDP growth vary wildly, but the general direction of change is down. The higher the temperature, the more growth slows, which equates to a hit to productivity. As well, even though the NGFS report is used by many central banks for scenario planning, the Net Zero in 2050 scenario is totally unrealistic from a practical perspective in light of the voracious power consumption appetite of AI data centres.

 

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.