The Bullish Elephant in the Room

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 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.

 

 

Bullish Tripwires

I've been fairly cautious on equities in the past few weeks, but that’s changing. There is a bullish elephant in the room that is becoming evident and can’t be ignored.

Two weeks ago, I outlined the bull case for stocks, which was characterized as having the odds of one in three or four (see Buy the Cannons: Exploring the Bull Case). At the time, I set out three bullish tripwires, all of which have been triggered. 

The small-cap Russell 2000 was tracing out an inverse head and shoulders pattern and it was unclear at the time whether it would stage a breakout above the neckline. The Russell 2000 has decisively broken out.
My long-term timing model was on the verge of a buy signal based on the MACD crossover of the NYSE Composite from negative to positive. That signal was triggered and it has extensively discussed in these pages.

 
The final trigger was a broad improvement in breadth. The S&P 500 and the NYSE Advance-Decline lines had broken out to all-time highs, but net 52-week highs-lows hadn’t made a new 2025 high. Fast forward to today, that indicator (bottom panel) made a 2025 high last week, and the mid-cap S&P 400 A-D Line also broke out to a new high. The only shoe left to drop is the small-cap S&P 600 A-D Line, which is lagging and yet to make an all-time high. At this rate, that’s only a matter of time.

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.