A V- or W-Shaped Rebound?

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.

 

Poised for a Relief Rally 
The tape of the S&P 500 looks dire. The index decisively breached its 200 dma and violated a support zone defined by its Q4 2025 lows. In the short run, it’s experiencing a series of positive divergences in the VIX and VVIX, which formed lower highs as the S&P 500 reached a lower low.

 
The market is poised for a short-term rebound, which President Trump may have triggered when he wrote late Friday on Truth Social, “We are getting very close to meeting our objectives as we consider winding down our great Military efforts…” The thinly traded Dow CFD contract is rising strongly, will investors see a V- or W-shaped bounce? 

 

The full post can be found here.