Don't buy that TACO just yet

TACO stands for “Trump Always Chickens Out” in trade negotiations. Financial Times journalist Robert Armstrong coined the term “TACO trade” as a colourful way of characterizing the Trump Put. When questioned by a reporter, Trump turned livid when he learned what TACO stood for.

It is in that context when, later in the day, the three-judge panel of the U.S. Court of International Trade unanimously ruled against the Trump Administration in VOS Selections v U.S. and struck down a whole range of tariffs by citing a lack of authority. The most equity bullish outcome would have been Trump taking this legal exit ramp to retreat from his trade war. Instead, he doubled down with the following social media message, possibly egged on by the TACO question. What was even more disturbing was the inclusion of Pepe the frog (my highlight), which was an image appropriated by White supremacists during the 2016 election.

 

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.     

Don't just obsess over NVIDIA

Mid-week market update: On the weekend, I presented this inverted chart of the S&P 500 as a different perspective and rhetorically asked, "Would you buy a stock with this chart?"

 

 

At the time, I had a slight bearish tilt on the market. Since then, the news backdrop has been calming. Trump extended the deadline for the implemented of the 50% tariffs on EU imports from June to July. The Japanese long bond initially rallied on news of a lower than expected supply, though the auction overnight of the 40-year JGB was disappointing. Consumer confidence unexpectedly improved, and the prospect of a nuclear deal with Iran may be on the horizon, which would reduce the geopolitical risk premium.

 

The S&P 500 calmed as well, and it's now back to test the trend line. The next big catalyst is the NVIDIA earnings report due after the close today.
 

While NVIDIA will largely determine the market's short-term direction, investors can find other pockets of superior performance.

 

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.   

 

Bond vigilantes and trade tensions derail the momentum bull

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 “neutral” on 16-May-2025)*
• Trading model: Neutral (Last changed from “bullish” on 14-Apr-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 Wide Trading Range

I warned you. Last week, I warned that the stock market was undergoing a wide trading range because of policy uncertainty (see What the Trade Détente Means for Investors): “The news out of the meeting in Geneva underlines an important point about the latest market tantrum and recovery. It was all attributable to U.S. policy that depends on the whims of one man, whose opinions can be unpredictable.”

I also argued that it was time for the stock market to take a breather. Since then, the S&P 500 began to pull back. The catalysts came in the form of a credit downgrade to U.S. debt and a poor 20-year Treasury auction, followed by President Trump’s threat to put a 50% tariff on the EU and a 25% tariff on Apple products not assembled in the U.S.

 

Let’s start with the fallout from the debt downgrade and bond market tantrum. While the sample size is extremely small (n=2), the experience from past credit downgrades has shown sloppy S&P 500 returns on a short-term horizon and positive on a 6–12-month time horizon. At a minimum, stock prices need some time to digest their gains after the rebound off the April low.

 

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.   

Sell America = Buy Gold

I am reiterating my bullish view on gold. Gold staged an upside breakout through a cup-and-handle pattern at 2100 in early 2024 and hasn’t looked back since. Moreover, it has staged upside relative breakouts against both the S&P 500 and a 60/40 proxy and it has stayed above the relative breakout levels even after the recent pullback. The technical pattern of multi-year bases and subsequent absolute and relative breakouts is highly reminiscent of the pattern experienced by gold at the start of the 21st Century, which took the yellow metal from its breakout at 500 in 2004 to significant higher prices.
 

I believe this is just the start of a secular bull cycle for gold prices, based on a secular Sell America investment cycle.
 

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.  

Is Sell America sneaking up on the equity bulls?

Mid-week market update: The S&P 500 were consolidating its gains after the upside price gap in reaction to the Sino-American interim trade agreement. You can tell a lot about the psychology of a market by the way it reacts to gaps. So far, the gap hasn't been filled - and some gaps are never filled, which is a bullish development.

 

 

Beneath the surface, however, risks are rising, especially in the form of the ascendance of the "Sell America trade".

 

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. 

S&P 500: A Healing Patient Who Needs Rest

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: Bearish (Last changed from “neutral” on 11-Apr-2025)*
• Trading model: Neutral (Last changed from “bullish” on 14-Apr-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 Bullish Recovery

The bullish recovery of the S&P 500 has been astounding in speed and magnitude. Not only has the S&P 500 regained its 200 dma, but also the NYSE Advance-Decline Line has made an all-time high. This is a welcome bullish development. That said, weakness in the mid- and small-cap A-D Lines is disconcerting.

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.

What the Trade Détente Means for Investors

Treasury Secretary Scott Bessent didn’t return from Switzerland and proclaim “Trade peace in our time” while waving a piece of paper. Instead, the interim deal represented a signal toward a trade détente and the acknowledgement that China is an equal in global trade with the U.S.

The agreement. lowered the U.S. tariff on Chinese imports from 145% to 30% for 90 days. China reciprocated by lowering its tariffs on U.S. imports to 10%. Shipping bookings skyrocketed in response and the deal took the tail-risk of a recession off the table.
 

It’s no surprise that the stock market rallied.
 

Before you become overly excited, analysis from the Budget Lab at Yale found that the average effective tariff rate is now 17.8% pre-substitution for high-priced imports and 16.4% post-substitution, which are still very high by historical standards.

Here’s what the trade détente means for investors.
 

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.    

From Fear to Greed

Mid-week market update: The market's turnaround on Monday was remarkable. Going into Friday, expectations for the Geneva trade talks weren't high. Trump had floated a reduction in the tariff rate to 80%. Instead, the U.S. cut the rate to 30%, and China cut its rate to 10%. With recession tail-risk fading, it's not a surprise that markets went full risk-on.

 

There are lots of reasons to turn bullish. Numerous price momentum studies point to significant higher stock prices. On the other hand, the Fear & Greed Index has recovered from a fearful to a greedy reading. It may be a time for a pause in the advance.

 

 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 Sector and Factor Review of Market Internals

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: Bearish (Last changed from “neutral” on 11-Apr-2025)*
• Trading model: Neutral (Last changed from “bullish” on 14-Apr-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 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.    

Why the Detox Isn't Over

Treasury Secretary Scott Bessent has warned that the economy may need to undergo a detox period before it returns to more stable growth. Since that warning, stock prices sharply pulled back and the VIX Index spiked to above 60, which are levels not seen since the 2024 bottom, the COVID Crash and the GFC. Related sentiment indicators, such as the term structure of the VIX, inverted, indicating high levels of fear. The market subsequently experienced a Zweig Breadth Thrust, which is an indicator of price momentum consistent with market bottoms. Is the detox over and is the bull back?

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.

Here are some historical lessons from past fear spikes.

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.   

The Eyes of the Beholder

Mid-week market update: The S&P 500 is stalling just below its 200 dma after becoming overbought on the 5-day RSI and the percentage of stocks above the 20 dma. What technical pattern is it tracing out? Is it a bull flag (shown by the red lines), or a bear flag (black lines).

 

Bullishness and bearishness are in 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.   

Trust the Thrust, or Sell in May?

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: Bearish (Last changed from “neutral” on 11-Apr-2025)*
• Trading model: Neutral (Last changed from “bullish” on 14-Apr-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.

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.   

 

A Trend Model update: Still cautious

My Trend Asset Allocation Model is a market timing model that has been running since 2013. While the model only issues buy, hold and sell signals for stocks, investors nevertheless need to make their own decisions on how much to buy and sell. Based on my out-of-sample signals, I created a model portfolio by varying the equity weight by 20% around a 60% SPY and 40% IEF benchmark. The turnover characteristics of the model portfolio is manageable, averaging 3.5 signals per year in the last five years.

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%

Here is what it’s saying now.

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.