Mag 7, or Lag 7?

I have been an advocate of holding a barbell position of U.S. large-cap growth and EAFE value stocks in equity allocations. More recently, the EAFE value portion has outperformed while the U.S. large-cap growth component has lagged. As a consequence, I am increasingly seeing questions of whether it’s time to rethink the allocation to U.S. large-cap growth stocks.

As the underperformance of U.S. growth is mainly attributable to weakness in the Magnificent Seven names. The question becomes: Has the Mag 7 become the Lag 7?

The full post can be found here.

Did Trump Jinx S&P 7000?

Mid-week market update: The S&P 500 achieved a fresh all-time high yesterday (Tuesday) and it touched 7000 today before retreating. President Trump posted about the event, did he jinx the market?

 

Probably not. The Fed presented the market with a number of potential surprises. In the end, the Fed decision and the subsequent press conference turned out to be a big yawn. We could have seen political fireworks surrounding the investigation, or the question of whether Powell will remain on the Board after the expiry of his chairmanship, but we didn't. Nor did we see Trump upstage the FOMC by announcing the selection of a new Fed Chair.

The full post can be found here.

A Welcome Sentiment Reset

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). As this site is shutting down on March 31, 2026, my inner trader is retiring so that there will be no tradings outstanding at the end of the quarter. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 to 16-Jan-2026 is shown below, and the chart will no longer be updated.

 

 

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)*

* 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.

What Positioning Rinse?

Coming into last weekend when news of Trump’s Greenland annexation demands hit the tape, it appeared that the stock market was poised for a positioning rinse. The BoA Global Manager Survey found that respondents’ cash levels had reached an all-time low, and very few managers had taken out tail-risk hedges. Investors were all bulled up, and the Greenland news was a potential catalyst to spark a correction.

The full post can be found here.

How to Position for the Greenland and Other 2026 TACOs

When the markets became rattled by the prospect of a Trump threat to annex Greenland over the weekend, I knew that a TACO (Trump Always Chickens Out) walk back was inevitable. I observed in the past that the markets would eventually discipline Trump’s unusual excesses. Indeed, the combination of a spiking 10-year Treasury yield and surging volatility indices pressured the White House to find a face-saving off-ramp.

In addition, I believe the Greenland Gambit along with the Venezuelan Adventure are part of a pattern of foreign policy moves as domestic policy safety valves leading up to the mid-term election. Investors should view possible U.S. foreign policy initiative between today and November within an electoral framework and react accordingly.

The full post can be found here.

Greenland Follows the Powell Playbook

Mid-week market update: Investors have seen this movie before in the recent past. A market moving event breaks over the weekend. The market freaks out at the open. The market calms soon after and life goes on.

 

The last time this happened, the news was an investigation of Fed Chair Powell. This time, it's the possible annexation of Greenland. Even though the S&P 500 remains in a trading range, but the equal-weighted S&P 500, the Russell 2000, and the MSCI All-Country World Ex-US Index have regained most if not all of their losses from the fright over Greenland.

 

 

 The full post can be found here.

Embrace the Market's Animal Spirits

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 26-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.

Relentless Momentum

The price momentum that I highlighted last week has been relentless. Even as the S&P 500 tests resistance at its all-time high, the equal-weighted S&P 500, the small-cap Russell 2000 and the MSCI All-Country World Index Ex-U.S. all surged to fresh highs.

  

There is nothing more bullish than a new high.
 

The full post can be found here.

A Time to Reap

I know that I have been negative on many Trump policies in these pages, but to everything there is a season. For U.S. equity investors, early 2026 is a time to reap the benefits of Trump’s 2025 policies. Last year was tumultuous for policy, but policy uncertainty is fading, and the stimulative and pro-cyclical elements of the OBBB Act are becoming evident in early 2026. In addition, the Economic Surprise Index, which measures whether economic releases are beating or missing consensus expectations, has been steadily positive since mid-2025.

 
This macro backdrop forms the basis of a bullish environment for growth expectations and bullish tailwinds for risk assets in early 2026.

The full post can be found here.

Remarkable Bullish Resilience

Mid-week market update: The S&P 500 is pulling back to test its rising trend line and the VVIX, or the volatility of the VIX Index, spikes above the key 100 level, which indicates rising market anxiety. However, an analysis of market internals reveal a remarkable level of bullish resilience in the face of recent unsettling headlines over Jerome Powell, Greenland, Iran, and Venezuela.

 

 

The full post can be found here.

A Momentum-Driven Start to 2026

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 26-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.

A Dow Theory Buy Signal

It is said that there is nothing more bullish than a fresh high. The U.S. stock market achieved the rare feat of printing all-time highs in both the Dow Jones Industrials and Transportation Averages at the same time. In case you didn’t fully understand the implications, that’s a Dow Theory buy signal.

The full post can be found here.

Regime Change Adventures: Bush, Obama, and now Trump

Emerging market shocks follow a familiar pattern in quantitative investing. When the event occurs, quantitative factor responses in stock selection get thrown out the window. As the smoke clears, top-down strategists map out the direction and magnitude of the shock, and technical analysis factors like price momentum and reversals start to work. As the magnitude of the shock becomes known, company analysts revise their earnings estimates, and estimate revision and earnings surprise factors begin to work. Finally, as the investment environment stabilizes, conventional value and growth factors gain traction.
 

The same thing is happening when U.S. forces seized Venezuelan President Maduro and his wife in a weekend raid. The smoke is starting to clear, both metaphorically and literally, and invest0ors can see the direction of the shock.
 

The raid made some sense from a Trumpian geopolitical viewpoint. Bloomberg opinion columnist Javier Blas characterized the move as Trump building his own Oil Empire. The Donroe Doctrine countries in the Western hemisphere, the U.S., Canada, Venezuela and the rest of the Americas, control roughly 40% of global oil production and this allows the White House much greater control over oil prices and production to avoid energy shocks in the future.

It all sounds good in theory. But as the recent history during the 21st Century shows, this is the third time the U.S. has attempted regime change in oil-producing countries. Bush tried it in Iraq, Obama tried it in Libya and now Trump is trying it in Venezuela. None worked out according to their pre-war textbooks. Here’s what this latest geopolitical adventure means for investors.

The full post can be found here.

Did the Santa Rally Actually Fail?

Mid-week market update: The S&P 500 ended the seasonally positive Santa Claus rally window down -0.1% this year. According to Wall Street lore, this foreshadows a weak year for stock prices.

 

 

But did investors really miss Santa Claus this year? The Dow, the equal-weighted S&P 500, the NYSE Composite were all positive during the SCR window. Moreover, the S&P 500 made an all-time high the day after the window closed.

 

The full post can be found here.

What Santa 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 26-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.

If Santa Should Fail to Call…

The seasaonlly positive Santa Claus rally spans the last five days of the year and the first two days of the new year, and the window opened on December 25. So far, the S&P 500 is trading slightly below the closing price on  December 23. 

 
The Wall Street adage was first coined by Yale Hirch, “If Santa should fail  to call, bears may come to Broad and Wall”. Can the market rally on Monday, the last day of the Santa rally window, to rescue the bullish narrative?

While the historical record of failed Santa rallies is sobering, it’s difficult to believe that a few days at the turn of the year can have a significant price momentum effect for the rest of the year.

The full post can be found here.

Opportunities and Challenges of 2026

The accompanying chart from Jeffrey Hirsch of Almanac Trader shows the expected seasonal price pattern for the S&P 500. As with any seasonality analysis, direction is more important than the magnitude of the move. If history is any guide, expect a volatile year until October, followed by a rally into year-end.
I agree with the broad strokes of the seasonality analysis, and the pattern forms the base case of my S&P 500 market expectations for 2026.

But I still have questions for the market, and here are the opportunities and challenges for investors in the new year.

The full post can be found here.