Twilight of the AI 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: 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.

 

Punching Below Its Weight

Is the red-hot artificial intelligence investment theme stumbling? Even AI cheerleader Sam Altman, the head of OpenAI, sounded a warning: “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes.”

Even as the tech-heavy NASDAQ 100 grinds upward to new highs, it’s showing signs of punching below its weight. Its relative performance (middle panel) is exhibiting lower lows and lower highs. Historically, NASDAQ 100 relative performance has been inversely correlated with the 10-year Treasury yield because of its high-duration characteristic, but it hasn’t been able to lead the market despite weakness in the 10-year yield. The weakness in relative breadth (bottom panel) is another warning of stumbling relative strength. All of this is occurring against a backdrop of a rollover in Bitcoin prices, indicating a retreat in the market’s animal spirits.

 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.