tag:blogger.com,1999:blog-8165595311100642472024-03-18T00:31:59.865-07:00Humble Student of the MarketsWelcome to my blog Humble Student of the Markets
These are my musings about the markets (mostly equities), hedge funds and investments in general.Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.comBlogger2750125tag:blogger.com,1999:blog-816559531110064247.post-46819206516575939202024-03-17T10:02:00.000-07:002024-03-17T10:02:00.193-07:00The stealth breakout you may have missed<b>Preface: Explaining our market timing models</b> <div>We maintain several market timing models, each with differing time horizons. The "<b>Ultimate Market Timing Model</b>" is a long-term market timing model based on the research outlined in our post, <a href="https://humblestudentofthemarkets.com/2016/01/26/building-the-ultimate-market-timing-model/">Building the ultimate market timing model</a>. This model tends to generate only a handful of signals each decade.</div><div></div><div><br />The <b>Trend Asset Allocation Model</b> 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 <a href="https://humblestudentofthemarkets.com/trend-model-report-card/" target="_blank">here</a>.</div><p></p><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHmagT1iqGzPM7z8_UuhzNP_nnCiWs0OfUg6VgOKMrh5WsNl6kcQZGqTro_A-vnTc22E7AQaFnh-fxZ3_UYpgNXCROyfYJSPUv8Wnav2X26pNlIyTT92KcvHhwDQukcp3n3vnE-AJrW4Om1Cu3wwx9n8nQoMGxNNE2Un6XACfBCFFiWrcGftAZ79BA-296/s996/Trend%20Model%20perf.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="723" data-original-width="996" height="290" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHmagT1iqGzPM7z8_UuhzNP_nnCiWs0OfUg6VgOKMrh5WsNl6kcQZGqTro_A-vnTc22E7AQaFnh-fxZ3_UYpgNXCROyfYJSPUv8Wnav2X26pNlIyTT92KcvHhwDQukcp3n3vnE-AJrW4Om1Cu3wwx9n8nQoMGxNNE2Un6XACfBCFFiWrcGftAZ79BA-296/w400-h290/Trend%20Model%20perf.png" width="400" /></a></div><p></p><div></div><div>My inner trader uses a <b>trading model</b>, 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 <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.</div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFvqLb6jub4ZKkFpw0OqfORRovcS3Ut7WziMMdrk9to_pFs8460jGaHFb-E0yZtxkFlR2yvE-7Mgo7UrDROAPlwZY4jr3Qf7mkLEHeEgXzGlbHOQJIak4QHNlFsFZ8oDhCycI2LIODEIxEBthFFicLrZa8EIVFdnPXLPJOkDzJo5tYNvAKeJBCPDp-Ex32/s1424/Inner%20Trader.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1035" data-original-width="1424" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFvqLb6jub4ZKkFpw0OqfORRovcS3Ut7WziMMdrk9to_pFs8460jGaHFb-E0yZtxkFlR2yvE-7Mgo7UrDROAPlwZY4jr3Qf7mkLEHeEgXzGlbHOQJIak4QHNlFsFZ8oDhCycI2LIODEIxEBthFFicLrZa8EIVFdnPXLPJOkDzJo5tYNvAKeJBCPDp-Ex32/w400-h291/Inner%20Trader.png" width="400" /></a></div><br /><p></p><p></p><div>The latest signals of each model are as follows:</div><p></p><p></p><div><ul><li>Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*</li><li>Trend Model signal: Bullish (Last changed from “neutral” on 28-Jul-2023)*</li><li>Trading model: Neutral (Last changed from “bullish” on 24-Jan-2024)*</li></ul><i>* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.</i><br /><br /><b>Update schedule</b>: I generally update model readings on my <a href="https://humblestudentofthemarkets.com/">site</a> on weekends. I am also on X/Twitter at @humblestudent. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>.<br /><br />Subscribers can access the latest signal in real time <a href="https://humblestudentofthemarkets.com/my-inner-trader/">here</a>.</div><div> </div><p></p><h4 style="text-align: left;">A convincing breakout at 2100</h4><div style="text-align: left;">My recent publication highlighting the opportunity in gold mining stocks worked out better than expected (see <a href="https://humblestudentofthemarkets.com/2024/03/04/how-gold-miners-could-be-a-refuge-from-the-yolo-and-fomo-frenzy/" target="_blank">How gold miners could be a refuge from the YOLO and FOMO frenzy</a>). The gold miners’ ETF (GDX) is up slightly over 10% in under two weeks.</div><p style="text-align: left;"></p><div style="text-align: left;">While GDX may be a little extended in the short run, I would like to point out the long-term potential in gold. Gold has staged a convincing upside breakout from a multi-month cup and handle formation. Moreover, the gold-to-S&P 500 ratio (bottom panel) is turning up from a multi-year saucer-shaped bottom, indicating the possible start of a new relative bull for gold over stocks. As well, the breakout has occurred with little fanfare as investors have been focused on AI and GLP-1 plays. This combination of breakout and lack of public participation suggests a substantial upside potential.</div><div style="text-align: left;"><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtoYg-t8YUB7U2Dncj-K9DM7Xwk6c7d1r5n8Us78W5lNwk69pVFzLzYgs15pPiN2NzMDuVdT0cRcUPDtBMvo9wVWg0eONzGyBuBX-aTR6atPoWUNB45S92V2Q24Cc3_qJciTGTPuze1vPvi7sTGeqxqTs7XIeRnvfhI2jH395anD9bV3-HTdRGRFy3nsQ_/s700/Gold%20and%20SPX.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="530" data-original-width="700" height="303" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtoYg-t8YUB7U2Dncj-K9DM7Xwk6c7d1r5n8Us78W5lNwk69pVFzLzYgs15pPiN2NzMDuVdT0cRcUPDtBMvo9wVWg0eONzGyBuBX-aTR6atPoWUNB45S92V2Q24Cc3_qJciTGTPuze1vPvi7sTGeqxqTs7XIeRnvfhI2jH395anD9bV3-HTdRGRFy3nsQ_/w400-h303/Gold%20and%20SPX.png" width="400" /></a></div> </div><div style="text-align: left;"> The full post can be found <a href="https://humblestudentofthemarkets.com/2024/03/17/the-stealth-breakout-you-may-have-missed/" target="_blank">here</a>.<br /></div><p></p>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-61815933491857349342024-03-15T17:11:00.000-07:002024-03-15T17:11:09.589-07:00A reply to Grantham's AI warning<div style="text-align: left;">Well-known value investor Jeremy Grantham recently penned an <a href="https://www.gmo.com/globalassets/articles/viewpoints/2024/gmo_the-great-paradox-of-the-us-market_3-24.pdf" rel="nofollow" target="_blank">essay </a>titled, “The Great Paradox of the U.S. Market”, in which he warned, “Prices reflect near perfection yet today’s world is particularly imperfect and dangerous”.</div><p style="text-align: left;"></p><div style="text-align: left;">In particular, he sounded the alarm over the bubble in AI stocks and cited the <a href="https://www.gartner.com/en/documents/3887767" rel="nofollow" target="_blank">Gartner Hype Cycle</a> as the main reason for caution:</div><div style="text-align: left;"> </div><div style="text-align: left;"><blockquote>But every technological revolution like this – going back from the internet to telephones, railroads, or canals – has been accompanied by early massive hype and a stock market bubble as investors focus on the ultimate possibilities of the technology, pricing most of the very long-term potential immediately into current market prices. And many such revolutions are in the end often as transformative as those early investors could see and sometimes even more so – but only after a substantial period of disappointment during which the initial bubble bursts. Thus, as the most remarkable example of the tech bubble, Amazon led the speculative market, rising 21 times from the beginning of 1998 to its 1999 peak, only to decline by an almost inconceivable 92% from 2000 to 2002, before inheriting half the retail world!</blockquote><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0k0D9Lo7fUFULyRv7S1_9IvIZyI8rOZs0piMVYAvjlmHibwpeH4FjriB1ujfja38vVmqjwXjp4uDkg5lQQGyOO_izT6rZbN3XC4-OohwKQkc6hcLBdIVf8E_-HlNghvr3TGwx2l20ZDGlUrL7XAf77hYrd2CU__PCp7XQlqOGFTVDSc_MHp8kL340UAOh/s970/Gartner%20hype%20cycle.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="815" data-original-width="970" height="336" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0k0D9Lo7fUFULyRv7S1_9IvIZyI8rOZs0piMVYAvjlmHibwpeH4FjriB1ujfja38vVmqjwXjp4uDkg5lQQGyOO_izT6rZbN3XC4-OohwKQkc6hcLBdIVf8E_-HlNghvr3TGwx2l20ZDGlUrL7XAf77hYrd2CU__PCp7XQlqOGFTVDSc_MHp8kL340UAOh/w400-h336/Gartner%20hype%20cycle.png" width="400" /></a></div><br />As much as I respect Grantham’s investment insights, he suffers from the value investor problem of being too early and overly reliant on valuation for his views. I reiterate my view that it’s still early in the bull cycle for AI stocks (see <a href="https://humblestudentofthemarkets.com/2024/02/24/the-path-to-magnificent-exuberance/" target="_blank">The Path to Magnificent Exuberance</a>). Here’s why.</div><div style="text-align: left;"> </div>The full post can be found <a href="https://humblestudentofthemarkets.com/?p=88773" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-21592013215173624802024-03-13T13:16:00.000-07:002024-03-13T13:16:16.732-07:00Waiting for the recycle amidst an elevated tail-risk backdrop<div style="text-align: left;"><b>Mid-week market update: </b><a href="https://www.marketwatch.com/story/global-stocks-are-headed-for-a-correction-but-the-pullback-likely-wont-snowball-into-a-bear-market-ned-davis-research-says-5cd8cf4d" rel="nofollow" target="_blank">Marketwatch </a>recently highlighted analysis from NDR which concluded that sentiment was extended and while it may make sense to be cautious about adding risk, it's too early to turn tactically bearish until readings recycle from an overbought condition.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMSQeYzcAD8oNAUsInw4R0w_iTFLeutu5LWfJ3woUB5J0zLAx1n_YxHe8IEPwOVVfBCQvGMYQjzHYqX74RvxID7S4ATNqEwuElWz1vLQ5hyphenhyphenEbBbWfly58G1rdsApQvBgM4LhX9V-JNs1ICba4BiJZfrob9Ew9mhps4wmRxSLvIAe2QsUI0HeClBrM1mu_w/s1050/NDR%20sentiment.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="750" data-original-width="1050" height="286" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMSQeYzcAD8oNAUsInw4R0w_iTFLeutu5LWfJ3woUB5J0zLAx1n_YxHe8IEPwOVVfBCQvGMYQjzHYqX74RvxID7S4ATNqEwuElWz1vLQ5hyphenhyphenEbBbWfly58G1rdsApQvBgM4LhX9V-JNs1ICba4BiJZfrob9Ew9mhps4wmRxSLvIAe2QsUI0HeClBrM1mu_w/w400-h286/NDR%20sentiment.jpg" width="400" /></a></div><br />I agree. I've been saying the same thing for several weeks. A correction or pullback is on the horizon, but hasn't arrived yet. While signs of technical deterioration are appearing, a sideways consolidation marked by a rolling correction is very possible.<br /></div><div style="text-align: left;"> </div><div style="text-align: left;">Here are the indicators that I've been watching, some of which have recycled and some have not.</div><div style="text-align: left;"><br /></div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/03/13/waiting-for-the-recycle-amidst-an-elevated-tail-risk-backdrop/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-53220054782032814302024-03-10T10:19:00.000-07:002024-03-10T10:19:00.140-07:00A Hindenburg Moment for growth stocks?<b>Preface: Explaining our market timing models</b> <div>We maintain several market timing models, each with differing time horizons. The "<b>Ultimate Market Timing Model</b>" is a long-term market timing model based on the research outlined in our post, <a href="https://humblestudentofthemarkets.com/2016/01/26/building-the-ultimate-market-timing-model/">Building the ultimate market timing model</a>. This model tends to generate only a handful of signals each decade.</div><div></div><div><br />The <b>Trend Asset Allocation Model</b> 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 <a href="https://humblestudentofthemarkets.com/trend-model-report-card/" target="_blank">here</a>.</div><p></p><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHmagT1iqGzPM7z8_UuhzNP_nnCiWs0OfUg6VgOKMrh5WsNl6kcQZGqTro_A-vnTc22E7AQaFnh-fxZ3_UYpgNXCROyfYJSPUv8Wnav2X26pNlIyTT92KcvHhwDQukcp3n3vnE-AJrW4Om1Cu3wwx9n8nQoMGxNNE2Un6XACfBCFFiWrcGftAZ79BA-296/s996/Trend%20Model%20perf.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="723" data-original-width="996" height="290" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHmagT1iqGzPM7z8_UuhzNP_nnCiWs0OfUg6VgOKMrh5WsNl6kcQZGqTro_A-vnTc22E7AQaFnh-fxZ3_UYpgNXCROyfYJSPUv8Wnav2X26pNlIyTT92KcvHhwDQukcp3n3vnE-AJrW4Om1Cu3wwx9n8nQoMGxNNE2Un6XACfBCFFiWrcGftAZ79BA-296/w400-h290/Trend%20Model%20perf.png" width="400" /></a></div><p></p><div></div><div>My inner trader uses a <b>trading model</b>, 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 <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.</div><div> </div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBSbqpzjkUJF3moYJZ4Xv8EwKLzjdM5TRKG4JoZhLagEo6RfU2o-DJg9ufuT-uDxm15BH9_SRmf0Y2E5wHNbKchZA5n8GSB_p88K6mrxPG73fU65-5zhMTLT1BRm0xbRBFXS71aWRDPudQnEuy9tq6ulpsxvqsdHQgvj-_IK_uKIH_IQPFnkALZkpyeFe6/s1424/Inner%20Trader.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1035" data-original-width="1424" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBSbqpzjkUJF3moYJZ4Xv8EwKLzjdM5TRKG4JoZhLagEo6RfU2o-DJg9ufuT-uDxm15BH9_SRmf0Y2E5wHNbKchZA5n8GSB_p88K6mrxPG73fU65-5zhMTLT1BRm0xbRBFXS71aWRDPudQnEuy9tq6ulpsxvqsdHQgvj-_IK_uKIH_IQPFnkALZkpyeFe6/w400-h291/Inner%20Trader.png" width="400" /></a></div><br /></div><div>The latest signals of each model are as follows:</div><p></p><p></p><div><ul><li>Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*</li><li>Trend Model signal: Bullish (Last changed from “neutral” on 28-Jul-2023)*</li><li>Trading model: Neutral (Last changed from “bullish” on 24-Jan-2024)*</li></ul><i>* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.</i><br /><br /><b>Update schedule</b>: I generally update model readings on my <a href="https://humblestudentofthemarkets.com/">site</a> on weekends. I am also on X/Twitter at @humblestudent. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>.<br /><br />Subscribers can access the latest signal in real time <a href="https://humblestudentofthemarkets.com/my-inner-trader/">here</a>.</div><div> </div><p></p><div style="text-align: left;"><h4 style="text-align: left;">NASDAQ Hindenburg warnings<br /></h4></div><p>I have been concerned about the extended and frothy nature of the advance in growth stocks. Worries came to a head when the Semiconductors Index rallied through and reversed though an upward trending relative performance channel, indicating a possible blow-off top. Beneath the hood, however, market internals are signaling breadth deterioration for NASDAQ stocks that warn of an impending corrective downdraft.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJ8mM5ipQE4_wrVsQtf8HwNiHlcdwddjR-eC2fVUIotkBfU3WxpJr7VqWNezBD8W8lFA-VXL5ViZvYi1bKOYc-EZ0eFny259I8Th_NosWFvDt_bVEyYqjRZ59BpzwwkiQOIrWQvwZEbp4pbGHnZI9YBcTUPwqgDLIhUF1EcmddN5oKBGIBFLYtfesPEKsm/s700/SOX.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="499" data-original-width="700" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJ8mM5ipQE4_wrVsQtf8HwNiHlcdwddjR-eC2fVUIotkBfU3WxpJr7VqWNezBD8W8lFA-VXL5ViZvYi1bKOYc-EZ0eFny259I8Th_NosWFvDt_bVEyYqjRZ59BpzwwkiQOIrWQvwZEbp4pbGHnZI9YBcTUPwqgDLIhUF1EcmddN5oKBGIBFLYtfesPEKsm/w400-h285/SOX.png" width="400" /></a></div><p> <br /></p><div style="text-align: left;">The ominous sounding but controversial Hindenburg Omen was designed by James Miekka to spot major market tops, though it purportedly only has many false positives and a success rate of 25%. The indicator looks for the combination of an increasingly bifurcated market, as measured by breadth divergences, and a downside momentum break from an uptrend.</div><div style="text-align: left;"><br />NASDAQ stocks have been flashing Hindenburg Omens starting in January and the warnings continued into February. While the signal isn’t perfect, the history of such clusters in the last 10 years has usually resolved in declines, shown as pink bars), while the instances of false positives (grey bars) have been relatively low.</div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPZGDICfFy3vxKxxrtMC3L3fO53f0iXoAUJrjy2mZ5ls77i4cxDBCYObwDF_xYA0iRmMeQHZRwUjoYDQqDCkTDsGsXjQgWsQT17Y5phLrwbNhDqgA6JAlisxhETdQIGSmXKkG-NnthBPXsaM5TLU2fy9uGjExe_Hvxt_e-Av2x0WbTAX-qrN7ay26SV0ia/s700/Hindenburg%20NDX.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="421" data-original-width="700" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPZGDICfFy3vxKxxrtMC3L3fO53f0iXoAUJrjy2mZ5ls77i4cxDBCYObwDF_xYA0iRmMeQHZRwUjoYDQqDCkTDsGsXjQgWsQT17Y5phLrwbNhDqgA6JAlisxhETdQIGSmXKkG-NnthBPXsaM5TLU2fy9uGjExe_Hvxt_e-Av2x0WbTAX-qrN7ay26SV0ia/w400-h240/Hindenburg%20NDX.png" width="400" /></a></div><br /><p></p>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/03/10/a-hindenburg-moment-for-growth-stocks/" target="_blank">here</a>.<br /><p></p>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-37736354080093334202024-03-09T10:11:00.000-08:002024-03-09T10:11:00.254-08:00Doesn't Fed policy matter to stocks anymore?<div><div style="text-align: left;">During Fed Chair Powell’s testimony to the Financial Services Committee of the U.S. House of Representatives, he said that it will likely be appropriate to begin cutting rates “at some point this year”. At the same time, he reiterated the message that other Fed officials sent to the markets that the Fed is not ready yet. The messaging has been the same and uniform by almost all speeches by Fed officials. The economy and labour market are strong. Central bankers have time to wait for more evidence that inflation is headed back to the 2% goal before cutting rates.</div><p style="text-align: left;"></p><div style="text-align: left;">Market expectations of the timing of the initial rate cut have evolved from March to May in the past few weeks. At the same time, stock prices have rallied and they rallied in response to Powell’s testimony. </div><div style="text-align: left;"> </div><div style="text-align: left;">Doesn’t Fed policy matter to stocks anymore?</div><div style="text-align: center;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgJ26Us4x2iEdpdq4_sVKp3RxuKDZM7_aAXhVObD32IEe3NPNkEvCD9aiOkMZ9QkSTi73FPbJ3eaI9SriYNEf9olEehW2Gxbvtlr_48VWHoo33FEfeg5AESRga0JgnbFf3AVuXhEEaCCg0G61pqO5mqR73KXIMfbqaZGk97anmp6AoMqFQTrW1UDXctO3PI/s702/Fed%20Funds%20probability.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="365" data-original-width="702" height="208" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgJ26Us4x2iEdpdq4_sVKp3RxuKDZM7_aAXhVObD32IEe3NPNkEvCD9aiOkMZ9QkSTi73FPbJ3eaI9SriYNEf9olEehW2Gxbvtlr_48VWHoo33FEfeg5AESRga0JgnbFf3AVuXhEEaCCg0G61pqO5mqR73KXIMfbqaZGk97anmp6AoMqFQTrW1UDXctO3PI/w400-h208/Fed%20Funds%20probability.png" width="400" /></a></div></div><p></p><p>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/03/09/doesnt-fed-policy-matter-to-stocks-anymore/" target="_blank">here</a>.<br /></p>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-42734257418192769892024-03-06T13:17:00.000-08:002024-03-06T13:41:37.497-08:00Mind the gaps<div style="text-align: left;"><b>Mid-week market update</b>: In the short run, how the market reacts after price gaps can be important clues to market psychology and direction. How quickly the market fills a gap is a measure of either strength or weakness.</div><div style="text-align: left;"> </div><div style="text-align: left;">As accompanying hourly chart of the S&P 500 shows, we have price gaps everywhere (upside gaps in grey, downside gap in pink). In particular, the price gap in reaction to the NVIDIA earnings report sticks out the most.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlDISlI69aaKYsRel58Nyp3pTvatfDW1LSPbXBkwow_Bx75HW7z-pZWjdc4STi1Osx6PBOZmcqehZ-P6k6r8FZnrLMNFQ-ZkUvWR94fDjWIqnBIbhgqnENBTsaGuEnhARi34lyPPhzOo2w2XcU3THmss9uxkEhjbbzaQILz6dEsI1m7w1iUSIhGqftrOq1/s700/SPX%20ST.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="312" data-original-width="700" height="179" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlDISlI69aaKYsRel58Nyp3pTvatfDW1LSPbXBkwow_Bx75HW7z-pZWjdc4STi1Osx6PBOZmcqehZ-P6k6r8FZnrLMNFQ-ZkUvWR94fDjWIqnBIbhgqnENBTsaGuEnhARi34lyPPhzOo2w2XcU3THmss9uxkEhjbbzaQILz6dEsI1m7w1iUSIhGqftrOq1/w400-h179/SPX%20ST.png" width="400" /></a></div></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Here is how I interpret the gaps.</div><div style="text-align: left;"><br /></div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/03/06/mind-the-gaps-2/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-59323751607515719572024-03-04T11:01:00.000-08:002024-03-04T11:01:00.136-08:00How gold miners could be a refuge from the YOLO and FOMO frenzy<div style="text-align: left;">I wrote yesterday that the stock market has been gripped by a YOLO (You Only Live Once) and FOMO (Fear of Missing Out) madness. I can suggest a possible refuge: gold and gold miners.</div><p style="text-align: left;"></p><div style="text-align: left;">Gold prices recently made a fresh high last week, but the breakout was not decisive to be judged as unabashedly bullish for the yellow metal. The technical pattern was nevertheless highly constructive as it’s tracing out a possible cup and handle formation. In addition, the inflation expectations ETF (RINF), which measures 30-year bond market inflation expectations, is upward sloping and confirms gold’s uptrend.</div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxUXmWuHpDmcUWm_LMUkc7C6yI7BbTjBHtqfTjh4FDwwFMR1FLosSYyXVBro6E8JsYmG-xwmhlnpxRmrYlxiL0XKHstkTTjfnpAH45LD0b9s5c71J03DpSwvHOO4risaAjzP1iq2hVq7KKiya34_QN-B7LjPcGw0oG39GT-0D7lSsutR-TTiIoJOJG-f-D/s700/Gold%20and%20RINF.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="499" data-original-width="700" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxUXmWuHpDmcUWm_LMUkc7C6yI7BbTjBHtqfTjh4FDwwFMR1FLosSYyXVBro6E8JsYmG-xwmhlnpxRmrYlxiL0XKHstkTTjfnpAH45LD0b9s5c71J03DpSwvHOO4risaAjzP1iq2hVq7KKiya34_QN-B7LjPcGw0oG39GT-0D7lSsutR-TTiIoJOJG-f-D/w400-h285/Gold%20and%20RINF.png" width="400" /></a></div><p></p><div style="text-align: left;"> The full post can be found <a href="https://humblestudentofthemarkets.com/2024/03/04/how-gold-miners-could-be-a-refuge-from-the-yolo-and-fomo-frenzy/" target="_blank">here</a>.<br /></div>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-1896958673511106962024-03-03T10:38:00.000-08:002024-03-03T10:38:00.182-08:00How to trade the YOLO and FOMO market<b>Preface: Explaining our market timing models</b> <div>We maintain several market timing models, each with differing time horizons. The "<b>Ultimate Market Timing Model</b>" is a long-term market timing model based on the research outlined in our post, <a href="https://humblestudentofthemarkets.com/2016/01/26/building-the-ultimate-market-timing-model/">Building the ultimate market timing model</a>. This model tends to generate only a handful of signals each decade.</div><div></div><div><br />The <b>Trend Asset Allocation Model</b> 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 <a href="https://humblestudentofthemarkets.com/trend-model-report-card/" target="_blank">here</a>.</div><p></p><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHmagT1iqGzPM7z8_UuhzNP_nnCiWs0OfUg6VgOKMrh5WsNl6kcQZGqTro_A-vnTc22E7AQaFnh-fxZ3_UYpgNXCROyfYJSPUv8Wnav2X26pNlIyTT92KcvHhwDQukcp3n3vnE-AJrW4Om1Cu3wwx9n8nQoMGxNNE2Un6XACfBCFFiWrcGftAZ79BA-296/s996/Trend%20Model%20perf.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="723" data-original-width="996" height="290" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHmagT1iqGzPM7z8_UuhzNP_nnCiWs0OfUg6VgOKMrh5WsNl6kcQZGqTro_A-vnTc22E7AQaFnh-fxZ3_UYpgNXCROyfYJSPUv8Wnav2X26pNlIyTT92KcvHhwDQukcp3n3vnE-AJrW4Om1Cu3wwx9n8nQoMGxNNE2Un6XACfBCFFiWrcGftAZ79BA-296/w400-h290/Trend%20Model%20perf.png" width="400" /></a></div><p></p><div></div><div>My inner trader uses a <b>trading model</b>, 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 <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.</div><div> </div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxKPNQ-yzmBr8-npufVYaG2DbbNkYwYKFBEULGjOp9p_40omVqSg3GfaL1Ey5X3xYDzuKtb_Wu-GfY5dhU9Ssbjp0_k2_qVcql9JkNMoU4b9VGK2NRau9dtGNRl7I10QHhyphenhyphengitSg2bkom3wV5_tnLCdjyfTC8_5ikGtH-QjkZMNHLZIlDtf4NnekMxR9lz/s1424/Inner%20Trader.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1035" data-original-width="1424" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxKPNQ-yzmBr8-npufVYaG2DbbNkYwYKFBEULGjOp9p_40omVqSg3GfaL1Ey5X3xYDzuKtb_Wu-GfY5dhU9Ssbjp0_k2_qVcql9JkNMoU4b9VGK2NRau9dtGNRl7I10QHhyphenhyphengitSg2bkom3wV5_tnLCdjyfTC8_5ikGtH-QjkZMNHLZIlDtf4NnekMxR9lz/w400-h291/Inner%20Trader.png" width="400" /></a></div><p></p><p></p><p>The latest signals of each model are as follows:</p><p></p><p></p><div><ul><li>Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*</li><li>Trend Model signal: Bullish (Last changed from “neutral” on 28-Jul-2023)*</li><li>Trading model: Neutral (Last changed from “bullish” on 24-Jan-2024)*</li></ul><i>* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.</i><br /><br /><b>Update schedule</b>: I generally update model readings on my <a href="https://humblestudentofthemarkets.com/">site</a> on weekends. I am also on X/Twitter at @humblestudent. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>.<br /><br />Subscribers can access the latest signal in real time <a href="https://humblestudentofthemarkets.com/my-inner-trader/">here</a>.</div><div> </div><p></p><div style="text-align: left;"><h4 style="text-align: left;">A YOLO and FOMO market</h4>Another week, another all-time high for the S&P 500 and NASDAQ Composite. The U.S. market has been infected with the FOMO (You Only Live Once) and FOMO (Fear of Missing Out) sentiment viruses while numerous macro and technical warnings have appeared.</div><div style="text-align: left;"><br />As an example, Bitcoin prices have soared. Historically, Bitcoin has been correlated with the relative performance of the ARK Innovation ETF (ARKK), which is a bellwether for speculative growth stocks. This time, ARKK hasn’t risen as much. Is this a positive or negative divergence?</div><div style="text-align: left;"><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg38L5beUorYs-dzfovm6KTQ-JsZQJPl1aMtAgW1NHahpeqAhCQ0UjQyCOREKywPSTWneDUKFbCEJtEH00WrGFEq6hIo30AYZeJUJNS1DN1mzBycProxDoKNPgJCU92L5HFuT__BrvzuCJ7P5S0C4VOaJP3ON3JAABH7vYeb0eDHfvJK68zKxXOMw8mK5-c/s700/BTC%20and%20ARKK.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="312" data-original-width="700" height="286" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg38L5beUorYs-dzfovm6KTQ-JsZQJPl1aMtAgW1NHahpeqAhCQ0UjQyCOREKywPSTWneDUKFbCEJtEH00WrGFEq6hIo30AYZeJUJNS1DN1mzBycProxDoKNPgJCU92L5HFuT__BrvzuCJ7P5S0C4VOaJP3ON3JAABH7vYeb0eDHfvJK68zKxXOMw8mK5-c/w640-h286/BTC%20and%20ARKK.png" width="640" /></a></div> </div><div style="text-align: left;">The full post can be found <a href="https://humblestudentofthemarkets.com/2024/03/03/how-to-trade-the-yolo-and-fomo-market/" target="_blank">here</a>.<br /></div><p></p>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-64167394004014063102024-03-02T10:18:00.000-08:002024-03-02T13:30:38.722-08:00Are you ready to be a contrarian cigar butt investor?<div style="text-align: left;">How would you feel about a star value manager with the track record shown in the chart below. While he beat the market in the wake of the dot-com bubble, he has only matched the performance of the S&P 500 since 2011. To be sure, he did beat his style benchmark (second panel).</div><div style="text-align: left;"> </div><div style="text-align: left;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMvb8k8SUh5fMNLfg6FJxwooOar3FiTvYvsXL3GuFpi1JTT7AKA8xhtP4SizAFXX9tCJPV4Tpe9YiviniJJJgfN756xS_HKB5XUwhi2-XgdwxckNX3WZCqoC17EfxXZPWcjrqhBMSyii6qr8Yos0b9ulw1TFht8NXxBmLcVoH2mbhNECcpaba_nJYNzxEV/s828/mystery%20chart.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="828" data-original-width="780" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMvb8k8SUh5fMNLfg6FJxwooOar3FiTvYvsXL3GuFpi1JTT7AKA8xhtP4SizAFXX9tCJPV4Tpe9YiviniJJJgfN756xS_HKB5XUwhi2-XgdwxckNX3WZCqoC17EfxXZPWcjrqhBMSyii6qr8Yos0b9ulw1TFht8NXxBmLcVoH2mbhNECcpaba_nJYNzxEV/w376-h400/mystery%20chart.png" width="376" /></a></div><div style="text-align: left;">The star manager is none other than the legendary Warren Buffett and the chart shows the relative performance of Berkshire Hathaway’s stock price relative to the S&P 500 and the Russell 1000 Value Index. Buffett’s best known recent win was his purchase of Apple in 2016 which became his largest holding, and whose relative returns are shown in the bottom panel.<br /> <br /> </div><div style="text-align: left;">I examine how he achieved his results, and offer studies of sources of alpha as examples of different investing styles.</div><div style="text-align: left;"></div><div style="text-align: left;"></div><div style="text-align: left;"></div><p></p><p>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/03/02/are-you-ready-to-be-a-contrarian-cigar-butt-investor/" target="_blank">here</a>.<br /></p>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-60262645974067377802024-02-28T13:16:00.000-08:002024-02-28T13:16:00.201-08:00How extended is this market?<div style="text-align: left;"><b>Mid-week market update:</b> I have said before that the stock market is extended in its advance and it could pull back at any time. How extended? Here is another metric.</div><div style="text-align: left;"> </div><div style="text-align: left;">Bollinger Bands (BB) are overbought/oversold indicators. If a stock or index rises above its 2 standard deviation BB. it is said to be overbought. Standard calculations of BBs are based on a 20 dma. It's unusual to see the market rise up above its upper 200 dma BB. The S&P 500 recently reached 110% above of its upper BB. The history of such episodes (pink bars) show that it usually pulls back soon afterwards. There were only two exceptions since 1997 when the market experienced a sustained uptrend (shown by arrows).</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDwiTjKzT3g5eelQ_szQBmVJO492MCmRtfLSK3tQRxdJuqYfv34pj6XQYw3eTr3qVWZYn3pyRvOaEdC3GqFNaIG22zzTc0OLacg5h50-_TWFrOTcrZ-EMjM0_lxMLt-1WT4p4F1r0YVGmd2_2anuMQ3K5j-QC-GQLsdPTDQFrgWJqbyhl-EW3XuYw3TLUs/s700/SPX%20%25BB.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="421" data-original-width="700" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDwiTjKzT3g5eelQ_szQBmVJO492MCmRtfLSK3tQRxdJuqYfv34pj6XQYw3eTr3qVWZYn3pyRvOaEdC3GqFNaIG22zzTc0OLacg5h50-_TWFrOTcrZ-EMjM0_lxMLt-1WT4p4F1r0YVGmd2_2anuMQ3K5j-QC-GQLsdPTDQFrgWJqbyhl-EW3XuYw3TLUs/w400-h240/SPX%20%25BB.png" width="400" /></a></div><br /> </div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/28/how-extended-is-this-market/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-65662429991074391862024-02-25T10:32:00.000-08:002024-02-25T10:32:00.136-08:00Did the NVIDIA-fueled rally exhaust the bulls?<b>Preface: Explaining our market timing models</b> <div>We maintain several market timing models, each with differing time horizons. The "<b>Ultimate Market Timing Model</b>" is a long-term market timing model based on the research outlined in our post, <a href="https://humblestudentofthemarkets.com/2016/01/26/building-the-ultimate-market-timing-model/">Building the ultimate market timing model</a>. This model tends to generate only a handful of signals each decade.</div><div></div><div><br />The <b>Trend Asset Allocation Model</b> 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 <a href="https://humblestudentofthemarkets.com/trend-model-report-card/" target="_blank">here</a>.</div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtuBK5hdlSjTsBIe57P8AhiStpuerhrF4k2RhK6G9ziw7FCxovIHOH9QPDotnbnJulPJ1zM8TtTp_3dysVGg-8ggMyR3SMzF2t4NtzXGc83ANoSnH3q88zyY0AqMW2qfcUNWmxCCVU5scByiIDEakq4TfxJ4PgBo7Ozy55LzGERrQ_u3LXpRxFVYwqepSn/s1423/Trend%20Model%20perf.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1034" data-original-width="1423" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtuBK5hdlSjTsBIe57P8AhiStpuerhrF4k2RhK6G9ziw7FCxovIHOH9QPDotnbnJulPJ1zM8TtTp_3dysVGg-8ggMyR3SMzF2t4NtzXGc83ANoSnH3q88zyY0AqMW2qfcUNWmxCCVU5scByiIDEakq4TfxJ4PgBo7Ozy55LzGERrQ_u3LXpRxFVYwqepSn/w400-h291/Trend%20Model%20perf.png" width="400" /></a></div><br /><p></p><div></div><div>My inner trader uses a <b>trading model</b>, 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 <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.</div><div> </div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_1XVfBp9m033sHn6FIjCpN-eD1vr15Aky97kYBi0KTuXTsowFvxEwxbkdgDD-vRpWJWB-uWWa7dtkhs8lqJ9q42T9X_986FcVJ-A7YHJnjNn3g5LFpfxQi0pbBn5xv1s32sEABW-vWW80xN82vRN3E2F9rCgp6Wd1bxW6dPq8DT1fkvLi9DbSMRi_fRPu/s1424/Inner%20Trader.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1035" data-original-width="1424" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_1XVfBp9m033sHn6FIjCpN-eD1vr15Aky97kYBi0KTuXTsowFvxEwxbkdgDD-vRpWJWB-uWWa7dtkhs8lqJ9q42T9X_986FcVJ-A7YHJnjNn3g5LFpfxQi0pbBn5xv1s32sEABW-vWW80xN82vRN3E2F9rCgp6Wd1bxW6dPq8DT1fkvLi9DbSMRi_fRPu/w400-h291/Inner%20Trader.png" width="400" /></a></div><br /></div><p></p><p></p><p>The latest signals of each model are as follows:</p><p></p><p></p><div><ul><li>Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*</li><li>Trend Model signal: Bullish (Last changed from “neutral” on 28-Jul-2023)*</li><li>Trading model: Neutral (Last changed from “bullish” on 24-Jan-2024)*</li></ul><i>* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.</i><br /><br /><b>Update schedule</b>: I generally update model readings on my <a href="https://humblestudentofthemarkets.com/">site</a> on weekends. I am also on X/Twitter at @humblestudent. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>.<br /><br />Subscribers can access the latest signal in real time <a href="https://humblestudentofthemarkets.com/my-inner-trader/">here</a>.</div><p></p><div style="text-align: left;"><br /></div><p></p><h4 style="text-align: left;">NVIDIA’s week<br /></h4><div style="text-align: left;">The main market focus of last week was NVIDIA. Anticipation was building ahead of the company’s earnings report and option positioning was extremely bullish. In the end, the bulls were rewarded by a blowout report. NVIDIA’s stock surged and pulled the market up with it.</div><div style="text-align: left;"><br />However, the advance was marred by poor internals. The rally in the S&P 500 took it to the top of its Bollinger Band, but it’s rare that upper BB rides are accompanied by negative RSI divergences and poor participation. Moreover, it’s unusual to see the market rally to an all-time high with the NASDAQ Summation Index flat when it should have been a source of strength.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTXQkbFS1gXjs_PVfczlbh8jAiqKMeuSPcDx8M4s2EkE3rnZ0SuEUibbE0V2RZwd648sIRhQt55IphZJGo9MqaA4NnAhmD-oQJzw7HuTJaX8Ieft8wQ6C2QmJnxOuJ905VAIh5xwNXETFMjJTxX795VskzyLLq6amPf2MUUesq8NUvoMht_ZRjYW7Armei/s842/SPX.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="842" data-original-width="700" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTXQkbFS1gXjs_PVfczlbh8jAiqKMeuSPcDx8M4s2EkE3rnZ0SuEUibbE0V2RZwd648sIRhQt55IphZJGo9MqaA4NnAhmD-oQJzw7HuTJaX8Ieft8wQ6C2QmJnxOuJ905VAIh5xwNXETFMjJTxX795VskzyLLq6amPf2MUUesq8NUvoMht_ZRjYW7Armei/w333-h400/SPX.png" width="333" /></a></div> </div><div style="text-align: left;">The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/25/did-the-nvidia-fueled-rally-exhaust-the-bulls/" target="_blank">here</a>.<br /></div>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-68235438392520360212024-02-24T10:19:00.000-08:002024-02-24T13:12:07.249-08:00The path to Magnificent Exuberance<p>Signs of technical deteriorations had been appearing last week, but NVIDIA’s earnings report saved the day. The earnings report can best be described as a blowout. The results beat Street expectations on all metrics and the company guided upwards. There wasn’t anything not to dislike about the report. As a consequence, the Semiconductor Index, which is a bellwether for artificial intelligence (AI) related plays, rallied strongly after briefly testing the lower bound of its absolute and relative return rising channels.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS5ERwPRGBsVCfs-yRXuMogP-yuoDU9YuMkAqXShpY6xwWfRjeVfYvfDBitWII0bYOJlLIXDVcGBsHazv_oRkRXwVBRqm9cRxyFepcHADVrYkZl6xyDO08pfU5rulsQQ4_8CwbxY3y1LXEKlSiVsc1__fSf44YWrjY-nIX9Q7PlvNboHvrMYWbNUAC-L3e/s700/SOX.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="499" data-original-width="700" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS5ERwPRGBsVCfs-yRXuMogP-yuoDU9YuMkAqXShpY6xwWfRjeVfYvfDBitWII0bYOJlLIXDVcGBsHazv_oRkRXwVBRqm9cRxyFepcHADVrYkZl6xyDO08pfU5rulsQQ4_8CwbxY3y1LXEKlSiVsc1__fSf44YWrjY-nIX9Q7PlvNboHvrMYWbNUAC-L3e/w400-h285/SOX.png" width="400" /></a></div><p><br />Even though some excesses are appearing, I reiterate my view that the AI bubble has far more room to run before it reaches the phase of Magnificent Exuberance (see <a href="https://humblestudentofthemarkets.com/2024/02/11/why-this-ai-bull-is-nothing-like-nasdaq-in-2000/" target="_blank">Why this AI bull is nothing like the NASDAQ in 2000</a>).<br /></p>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/24/the-path-to-magnificent-exuberance/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-45768801498929912782024-02-21T14:00:00.000-08:002024-02-21T14:24:14.601-08:00NVIDIA at the bat<div style="text-align: left;"><b>Mid-week market update</b>: The poem "Casey at the Bat" may represent an apt analogy for today's stock market (see <a href="https://en.wikipedia.org/wiki/Casey_at_the_Bat" rel="nofollow" target="_blank">Wikipedia entry</a> if you're unfamiliar with it). Technical warnings signs had been appearing. The S&P 500, the NASDAQ 100, and the Semiconductors Index, which is a bellwether for AI-related plays, had all weakened and violated their 10 dma. Even the Russell 2000 small cap index, which is largely unrelated to AI market factors, weakened below its 10 dma. </div><div style="text-align: left;"><br /></div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIpxgR5yWX_-5MisL7XwLfKvjlCKzHOrlJtT6EDsKynB4lINj3xSBm3Uw6AwCVseZSBAwJA2IBdb6WEtJevs1eNWBCvJQNsOZG_dLq5dXlnhGvLoeReDoQNHTEasaub8YPnILFzlNaDJIjua-2JyZVarstC3fJpaApalYoJ2tMnw571I5zEFxmg0x3p9rT/s800/temp.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="800" data-original-width="780" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIpxgR5yWX_-5MisL7XwLfKvjlCKzHOrlJtT6EDsKynB4lINj3xSBm3Uw6AwCVseZSBAwJA2IBdb6WEtJevs1eNWBCvJQNsOZG_dLq5dXlnhGvLoeReDoQNHTEasaub8YPnILFzlNaDJIjua-2JyZVarstC3fJpaApalYoJ2tMnw571I5zEFxmg0x3p9rT/w390-h400/temp.jpeg" width="390" /></a></div><br /></div><div style="text-align: left;"> </div><div style="text-align: left;">Much like the story in the poem, it was up to Casey (NVDIA), mighty Casey (NVIDIA) to pull the team out at the end.</div><div style="text-align: left;"><div style="text-align: left;"> </div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/21/nvidia-at-the-bat/" target="_blank">here</a>.<br /></div>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-17730399326202313102024-02-18T10:11:00.000-08:002024-02-18T10:11:00.305-08:00Are negative divergences necessarily bearish?<b>Preface: Explaining our market timing models</b> <div>We maintain several market timing models, each with differing time horizons. The "<b>Ultimate Market Timing Model</b>" is a long-term market timing model based on the research outlined in our post, <a href="https://humblestudentofthemarkets.com/2016/01/26/building-the-ultimate-market-timing-model/">Building the ultimate market timing model</a>. This model tends to generate only a handful of signals each decade.</div><div></div><div><br />The <b>Trend Asset Allocation Model</b> 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 <a href="https://humblestudentofthemarkets.com/trend-model-report-card/" target="_blank">here</a>.</div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtuBK5hdlSjTsBIe57P8AhiStpuerhrF4k2RhK6G9ziw7FCxovIHOH9QPDotnbnJulPJ1zM8TtTp_3dysVGg-8ggMyR3SMzF2t4NtzXGc83ANoSnH3q88zyY0AqMW2qfcUNWmxCCVU5scByiIDEakq4TfxJ4PgBo7Ozy55LzGERrQ_u3LXpRxFVYwqepSn/s1423/Trend%20Model%20perf.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1034" data-original-width="1423" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtuBK5hdlSjTsBIe57P8AhiStpuerhrF4k2RhK6G9ziw7FCxovIHOH9QPDotnbnJulPJ1zM8TtTp_3dysVGg-8ggMyR3SMzF2t4NtzXGc83ANoSnH3q88zyY0AqMW2qfcUNWmxCCVU5scByiIDEakq4TfxJ4PgBo7Ozy55LzGERrQ_u3LXpRxFVYwqepSn/w400-h291/Trend%20Model%20perf.png" width="400" /></a></div><br /><p></p><div></div><div>My inner trader uses a <b>trading model</b>, 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 <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.</div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8xW_U04cpqszNfsKNpiqRiRuwrUkbV8ckUwRHqdNr3aD2ocOKRY9LqBFI1bjb-ylQEtKDkUff2wo_9e7Ru5ZKZL8vsL9FWSatOS5DjQYH-Xdn4QGJGNSCnD2gXO-7sUQBLBAlNY-o3Ai8RkbPYsNfkBGXDGBIFgRhP8UdORjsMM7ejwuA8NTuvqEw3KG4/s1424/Inner%20Trader.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1035" data-original-width="1424" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8xW_U04cpqszNfsKNpiqRiRuwrUkbV8ckUwRHqdNr3aD2ocOKRY9LqBFI1bjb-ylQEtKDkUff2wo_9e7Ru5ZKZL8vsL9FWSatOS5DjQYH-Xdn4QGJGNSCnD2gXO-7sUQBLBAlNY-o3Ai8RkbPYsNfkBGXDGBIFgRhP8UdORjsMM7ejwuA8NTuvqEw3KG4/w400-h291/Inner%20Trader.png" width="400" /></a></div><p></p><p>The latest signals of each model are as follows:</p><p></p><p></p><div><ul><li>Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*</li><li>Trend Model signal: Bullish (Last changed from “neutral” on 28-Jul-2023)*</li><li>Trading model: Neutral (Last changed from “bullish” on 24-Jan-2024)*</li></ul><i>* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.</i><br /><br /><b>Update schedule</b>: I generally update model readings on my <a href="https://humblestudentofthemarkets.com/">site</a> on weekends. I am also on X/Twitter at @humblestudent. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>.<br /><br />Subscribers can access the latest signal in real time <a href="https://humblestudentofthemarkets.com/my-inner-trader/">here</a>.</div><p></p><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><h4 style="text-align: left;">Divergences everywhere</h4><div style="text-align: left;">From a technical perspective, divergences may not matter in the short term, but long-term divergences are particularly worrisome. </div><p style="text-align: left;"></p><div style="text-align: left;">The accompanying chart shows a series of long-term divergences that are concerning. Even as the S&P 500 rallied to all-time highs, the NYSE Advance-Decline Line did not confirm the fresh high. The relative performance of high beta to low volatility stocks, which is an indicator of equity risk appetite, is barely testing its overhead resistance. In the meantime, the 10-year Treasury yield (inverted scale) has been climbing and higher yields offer an increasingly more attractive alternative for investors. And the USD, which is historically inversely correlated to the S&P 500, has been rallying and creating headwinds for stock prices.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7ZR6wi8KJ9Zx8wTGxVGaMkSRyoeNfZTA7tZTI_y1QztTFdyIUAJPkTrWM8ysJ2Xg_jj9nJ3QG1qdeCZuKyZaXLfzQ3EL1-7oMF4cfu-nxaparF4uufZnx9aGLSupelfug7o-uc_B8xqbDB5P8xKTIAdTosxJLIoO6PYGmPR-e5XrF4K2fQHhicadnOwoI/s881/SPX%20breadth%20LT.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="881" data-original-width="825" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7ZR6wi8KJ9Zx8wTGxVGaMkSRyoeNfZTA7tZTI_y1QztTFdyIUAJPkTrWM8ysJ2Xg_jj9nJ3QG1qdeCZuKyZaXLfzQ3EL1-7oMF4cfu-nxaparF4uufZnx9aGLSupelfug7o-uc_B8xqbDB5P8xKTIAdTosxJLIoO6PYGmPR-e5XrF4K2fQHhicadnOwoI/w375-h400/SPX%20breadth%20LT.png" width="375" /></a></div> </div><div style="text-align: left;">How concerned should investors be about these divergences?</div><div style="text-align: left;"> </div><div style="text-align: left;">The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/18/are-negative-divergences-necessarily-bearish/" target="_blank">here</a>.</div>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-65012304500341869382024-02-17T10:13:00.000-08:002024-02-17T10:13:00.238-08:00Is transitory disinflation here to stay?<p>I’ve discussed the risk of transitory disinflation before, and it manifested itself in the form of hotter-than-expected January CPI and PPI reports. The reports rattled the bond market and expectations of the first quarter-point rate cut has been pushed out from May to June and a slower rate cut trajectory for the remainder of year.</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8WEkG2WT0wzsVq5moBGnummVv5nv1U376fV6sxv5NrMn28uRQysHVjJI9blnenh2JOn50xUJ5wJ5ODhDfUy4Q7eS_Py0Ed03ADoJ-elwytsKZSizTJ3K98I3l0vgFVvAowY3EO7IXiKD1LAsBlGfaZbaWNRnOgWdh8HcJzDtHI3NJfaHdqbf2n2WRCTtl/s763/Fed%20Funds%20probability.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="639" data-original-width="763" height="335" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8WEkG2WT0wzsVq5moBGnummVv5nv1U376fV6sxv5NrMn28uRQysHVjJI9blnenh2JOn50xUJ5wJ5ODhDfUy4Q7eS_Py0Ed03ADoJ-elwytsKZSizTJ3K98I3l0vgFVvAowY3EO7IXiKD1LAsBlGfaZbaWNRnOgWdh8HcJzDtHI3NJfaHdqbf2n2WRCTtl/w400-h335/Fed%20Funds%20probability.png" width="400" /></a></div><p><br /></p><div style="text-align: left;">As a reminder, here is Fed Chair Powell reply in to a question about the timing of rate cuts in his <a href="https://www.cbsnews.com/news/fed-chair-jerome-powell-interest-rates-60-minutes-transcript/" rel="nofollow" target="_blank">60 Minutes interview</a>: “We just want to see more good [inflation] data along those lines. It doesn't need to be better than what we've seen, or even as good. It just needs to be good. And so, we do expect to see that.” </div><div style="text-align: left;"> </div><div style="text-align: left;">The hot CPI report was undoubtedly a shock to Fed officials who had watching a series of tame inflation reports.</div><div style="text-align: left;"><br />The latest BoA Global Fund Manager Survey showed that only 4% of respondents expect higher rates and 7% expect higher inflation. It was therefore no surprise that bond prices skidded badly in the wake of the CPI report.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhH_S9DjOLgwjecoht36am5vuxftndFBwzglakyUu6zp-aownMwJtgYXMxHNt6Y1MdvsC7ZWL-uDmv3mkWsLlcOHw6zdHzC2JRtlY-SMXM_ZU8vb154yriUxDQXStvZ6-IZhULpe0y8f5Fc8V_YD5gW5nM4EYq649eDhUrDXZB8Go8RwIPl1JGpi1QFb3G1/s857/FMS%20rate%20expectations.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="498" data-original-width="857" height="233" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhH_S9DjOLgwjecoht36am5vuxftndFBwzglakyUu6zp-aownMwJtgYXMxHNt6Y1MdvsC7ZWL-uDmv3mkWsLlcOHw6zdHzC2JRtlY-SMXM_ZU8vb154yriUxDQXStvZ6-IZhULpe0y8f5Fc8V_YD5gW5nM4EYq649eDhUrDXZB8Go8RwIPl1JGpi1QFb3G1/w400-h233/FMS%20rate%20expectations.png" width="400" /></a></div><br /></div><div style="text-align: left;">Do the stronger-than-inflation reports mean a pivot to a “higher for longer” narrative? Here are bull and bear cases.</div><div style="text-align: left;"> </div><div style="text-align: left;">The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/17/is-transitory-disinflation-here-to-stay/" target="_blank">here</a>.</div>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-60990866140713228922024-02-14T13:10:00.000-08:002024-02-14T13:16:12.584-08:00A hiccup, or the start of a correction?<div style="text-align: left;"><b>Mid-week market update: </b>The hot CPI print on Tuesday spark a massive risk-off episode. The S&P 500 staged a partial recovery today. The key question is, "Is this just a hiccup in the bull run, or the start of a correction?"</div><div style="text-align: left;"> </div><div style="text-align: left;">The stock market has been ripe for a correction for some time. The percentage of bullish stocks on P&F charts has flashed a negative divergence, which has usually resolved in a market downdraft.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6_2nJHqzE-K8dYolbUfJFHnfsuNMq-3n0l_IogWLIWdhGqAMHDuuH8dzsJWa5tj2YU8jeHCHhAtLGUW4jiaC5rcJdhrdw0OR0Z6x9p4yGxwE1J2x9G_fj7k2xSzxdT3adl85o5BmjVLOZJ4JmDLmZ8L-sUF2kotT1rV-rwDeVuG4qyqFua96VCdwK1Fhx/s700/SPX%20%25bullish.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="421" data-original-width="700" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6_2nJHqzE-K8dYolbUfJFHnfsuNMq-3n0l_IogWLIWdhGqAMHDuuH8dzsJWa5tj2YU8jeHCHhAtLGUW4jiaC5rcJdhrdw0OR0Z6x9p4yGxwE1J2x9G_fj7k2xSzxdT3adl85o5BmjVLOZJ4JmDLmZ8L-sUF2kotT1rV-rwDeVuG4qyqFua96VCdwK1Fhx/w400-h240/SPX%20%25bullish.png" width="400" /></a></div> <br /></div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/14/a-hiccup-or-the-start-of-a-correction/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-71254199630994720902024-02-11T10:13:00.000-08:002024-02-11T10:13:00.158-08:00Why this AI bull is nothing like the NASDAQ in 2000<b>Preface: Explaining our market timing models</b> <div>We maintain several market timing models, each with differing time horizons. The "<b>Ultimate Market Timing Model</b>" is a long-term market timing model based on the research outlined in our post, <a href="https://humblestudentofthemarkets.com/2016/01/26/building-the-ultimate-market-timing-model/">Building the ultimate market timing model</a>. This model tends to generate only a handful of signals each decade.</div><div></div><div><br />The <b>Trend Asset Allocation Model</b> 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 <a href="https://humblestudentofthemarkets.com/trend-model-report-card/" target="_blank">here</a>.</div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtuBK5hdlSjTsBIe57P8AhiStpuerhrF4k2RhK6G9ziw7FCxovIHOH9QPDotnbnJulPJ1zM8TtTp_3dysVGg-8ggMyR3SMzF2t4NtzXGc83ANoSnH3q88zyY0AqMW2qfcUNWmxCCVU5scByiIDEakq4TfxJ4PgBo7Ozy55LzGERrQ_u3LXpRxFVYwqepSn/s1423/Trend%20Model%20perf.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1034" data-original-width="1423" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtuBK5hdlSjTsBIe57P8AhiStpuerhrF4k2RhK6G9ziw7FCxovIHOH9QPDotnbnJulPJ1zM8TtTp_3dysVGg-8ggMyR3SMzF2t4NtzXGc83ANoSnH3q88zyY0AqMW2qfcUNWmxCCVU5scByiIDEakq4TfxJ4PgBo7Ozy55LzGERrQ_u3LXpRxFVYwqepSn/w400-h291/Trend%20Model%20perf.png" width="400" /></a></div><br /><p></p><div></div><div>My inner trader uses a <b>trading model</b>, 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 <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.</div><p></p><p></p><p></p><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8K2lCbr6bcfQ4BP0gSAgxyWW2NYYeNP5-5bd4E6dh2FWG5T-d_UChWTp_EARsUs-6j3CLNizUsLMuCvHTpRmdFzM0ElvFS_ed58XNqHCtC9whLyeUruWKq0kOc-2_CjSrcYtNU3FsJqnX8TU5Y7pq3_fSQBUjRCd3a2nt2yXjiuGb5lUPPVUElFczfQ-A/s1424/Inner%20Trader.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1035" data-original-width="1424" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8K2lCbr6bcfQ4BP0gSAgxyWW2NYYeNP5-5bd4E6dh2FWG5T-d_UChWTp_EARsUs-6j3CLNizUsLMuCvHTpRmdFzM0ElvFS_ed58XNqHCtC9whLyeUruWKq0kOc-2_CjSrcYtNU3FsJqnX8TU5Y7pq3_fSQBUjRCd3a2nt2yXjiuGb5lUPPVUElFczfQ-A/w400-h291/Inner%20Trader.png" width="400" /></a></div><br /></div><p>The latest signals of each model are as follows:</p><p></p><p></p><div><ul><li>Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*</li><li>Trend Model signal: Bullish (Last changed from “neutral” on 28-Jul-2023)*</li><li>Trading model: Neutral (Last changed from “bullish” on 24-Jan-2024)*</li></ul><i>* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.</i><br /><br /><b>Update schedule</b>: I generally update model readings on my <a href="https://humblestudentofthemarkets.com/">site</a> on weekends. I am also on X/Twitter at @humblestudent. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>.<br /><br />Subscribers can access the latest signal in real time <a href="https://humblestudentofthemarkets.com/my-inner-trader/">here</a>.</div><p></p><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><h4 style="text-align: left;">Priced to the point of insanity?</h4>You may have seen the charts of the relative performance of the NASDAQ 100 to S&P 500. The ratio has already exceeded the dot-com peak in 2000. In addition, NYU professor Aswath Damodaran, who is regarded as the dean of company valuations, went on <a href="https://www.cnbc.com/video/2024/02/06/all-of-the-mag-7-stocks-look-overpriced-says-nyus-aswath-damodaran.html" rel="nofollow" target="_blank">CNBC </a>to say that Nvidia is priced “to the point of insanity”, while the other Magnificent Seven stocks are roughly fairly priced.</div><div style="text-align: left;"><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwMaF_2euuSucbr-p5YXOiwkOzsk9zqn4TilnQ5ROYOY9qIkycNB5y5pus5LbCplpqED78OedF5ujIgWKSrNAUy3Sf5ixvW2frT9ciU_Ycayc4LwIvVAOU4obV47A2mjV9V0jTA494kdNmIGR9KWc3oBBN-F-SxIYxxoavC6pt3pKGBFT24-dYwlvNVY1D/s780/NDX%20vs%20SPX.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="345" data-original-width="780" height="178" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwMaF_2euuSucbr-p5YXOiwkOzsk9zqn4TilnQ5ROYOY9qIkycNB5y5pus5LbCplpqED78OedF5ujIgWKSrNAUy3Sf5ixvW2frT9ciU_Ycayc4LwIvVAOU4obV47A2mjV9V0jTA494kdNmIGR9KWc3oBBN-F-SxIYxxoavC6pt3pKGBFT24-dYwlvNVY1D/w400-h178/NDX%20vs%20SPX.png" width="400" /></a></div><br /> <br />While the latest AI-driven mania may seem stretched by historical standards, we would argue that it has a lot further to run before the AI bull is done.<br /> </div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/11/why-this-ai-bull-is-nothing-like-nasdaq-in-2000/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-29350079905975563802024-02-10T10:10:00.000-08:002024-02-10T10:10:00.180-08:00How investable is China? (Revisited)<div style="text-align: left;">About a year ago, when China emerged out of its zero-COVID lockdowns, I rhetorically asked, “<a href="https://humblestudentofthemarkets.com/2023/01/14/time-to-revisit-the-question-how-investable-is-china/" target="_blank">How investable is China?</a>”. I concluded, “Long-term investors in China are likely to face subpar returns coupled with high volatility”.</div><div style="text-align: left;"><br />Now that China’s troubles have returned, it’s time to revisit the China investability question. The accompanying chart shows that China’s debt has exploded over the past decades, driven by a regime of growth-at-any-cost malinvestment. Similar credit cycles in other economies have resolved in financial crises. Will China be any different and how should investors react?<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYb0Jg8zStf-X62yEe6uBjMb-jE04FnGPcJWH-ZhUTHGzXu64SRiK_JFCxApiADtOJBV40Vo6VucCzbabQIH9mOoaaZ9pwI5U41zh7pzS-362JKp5cBHusfGQ_wr99NbPoRsRNRdMpmnb9LPmgyngSoxq0aCIE_R8RWpMOFNTpxwMpD5btKT_6GFxV6w0Z/s960/Global%20credit%20impulse.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYb0Jg8zStf-X62yEe6uBjMb-jE04FnGPcJWH-ZhUTHGzXu64SRiK_JFCxApiADtOJBV40Vo6VucCzbabQIH9mOoaaZ9pwI5U41zh7pzS-362JKp5cBHusfGQ_wr99NbPoRsRNRdMpmnb9LPmgyngSoxq0aCIE_R8RWpMOFNTpxwMpD5btKT_6GFxV6w0Z/w400-h300/Global%20credit%20impulse.png" width="400" /></a></div> The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/10/how-investable-is-china-revisited/" target="_blank">here</a>.<br /></div>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-15249646494895733512024-02-07T13:24:00.000-08:002024-02-07T13:24:00.131-08:00Correction imminent?<div style="text-align: left;"><b>Mid-week market update: </b>I am sure everyone has seen the breadth divergences. Even as the S&P 500 rises to all-time highs, different versions of the Advance-Decline Line are struggling. Breadth deterioration is evident the further down you go in market capitalization.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKDgzY3G4FQxQFSeZsDNUVhEHxFamJ6jM8ZZOq2JWHq2y6HGPIq4Tmvl2j2CC3m-pmLLPOwEqlQRD1_UHXJ0rqKKNfijKuflPuJmRiV4OBN0WJhLEBKVcwZIeMzO3Qvny-1eewQ1B-r-ddVNVjq-TYows1X6emSND1bgqO0TJhAHw1mqkCIbAURDYBfeg5/s900/SPX%20A-D.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="900" data-original-width="700" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKDgzY3G4FQxQFSeZsDNUVhEHxFamJ6jM8ZZOq2JWHq2y6HGPIq4Tmvl2j2CC3m-pmLLPOwEqlQRD1_UHXJ0rqKKNfijKuflPuJmRiV4OBN0WJhLEBKVcwZIeMzO3Qvny-1eewQ1B-r-ddVNVjq-TYows1X6emSND1bgqO0TJhAHw1mqkCIbAURDYBfeg5/w311-h400/SPX%20A-D.png" width="311" /></a></div> <br /></div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/07/correction-imminent/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-15816022591864187872024-02-04T10:14:00.000-08:002024-02-04T10:14:00.129-08:00Get ready to buy in May...<b>Preface: Explaining our market timing models</b> <div>We maintain several market timing models, each with differing time horizons. The "<b>Ultimate Market Timing Model</b>" is a long-term market timing model based on the research outlined in our post, <a href="https://humblestudentofthemarkets.com/2016/01/26/building-the-ultimate-market-timing-model/">Building the ultimate market timing model</a>. This model tends to generate only a handful of signals each decade.</div><div></div><div><br />The <b>Trend Asset Allocation Model</b> 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 <a href="https://humblestudentofthemarkets.com/trend-model-report-card/" target="_blank">here</a>.</div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtuBK5hdlSjTsBIe57P8AhiStpuerhrF4k2RhK6G9ziw7FCxovIHOH9QPDotnbnJulPJ1zM8TtTp_3dysVGg-8ggMyR3SMzF2t4NtzXGc83ANoSnH3q88zyY0AqMW2qfcUNWmxCCVU5scByiIDEakq4TfxJ4PgBo7Ozy55LzGERrQ_u3LXpRxFVYwqepSn/s1423/Trend%20Model%20perf.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1034" data-original-width="1423" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtuBK5hdlSjTsBIe57P8AhiStpuerhrF4k2RhK6G9ziw7FCxovIHOH9QPDotnbnJulPJ1zM8TtTp_3dysVGg-8ggMyR3SMzF2t4NtzXGc83ANoSnH3q88zyY0AqMW2qfcUNWmxCCVU5scByiIDEakq4TfxJ4PgBo7Ozy55LzGERrQ_u3LXpRxFVYwqepSn/w400-h291/Trend%20Model%20perf.png" width="400" /></a></div><br /><p></p><div></div><div>My inner trader uses a <b>trading model</b>, 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 <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.</div><p></p><p></p><p></p><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjonaCrzczVrDtgia5KbEvrltcu_DMj8MY-oCuuxO-RmPdxiBMzuBEyxItXATk6nJCf_7OjI1imjdHd000x1SpY9M9pczfm1wfOzBz0TV96b5Zn37tnzNM5u7pIYkePhRMBITWO00dHo-MpDDMybf0PFwY1GZ8oB40GyEVrqz-E62bizZk9kicZiQ-JDvtv/s1424/Inner%20Trader.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1035" data-original-width="1424" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjonaCrzczVrDtgia5KbEvrltcu_DMj8MY-oCuuxO-RmPdxiBMzuBEyxItXATk6nJCf_7OjI1imjdHd000x1SpY9M9pczfm1wfOzBz0TV96b5Zn37tnzNM5u7pIYkePhRMBITWO00dHo-MpDDMybf0PFwY1GZ8oB40GyEVrqz-E62bizZk9kicZiQ-JDvtv/w400-h291/Inner%20Trader.png" width="400" /></a></div><div style="text-align: left;"></div><p>The latest signals of each model are as follows:</p><p></p><p></p><div><ul><li>Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*</li><li>Trend Model signal: Bullish (Last changed from “neutral” on 28-Jul-2023)*</li><li>Trading model: Neutral (Last changed from “bullish” on 24-Jan-2024)*</li></ul><i>* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.</i><br /><br /><b>Update schedule</b>: I generally update model readings on my <a href="https://humblestudentofthemarkets.com/">site</a> on weekends. I am also on X/Twitter at @humblestudent. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>.<br /><br />Subscribers can access the latest signal in real time <a href="https://humblestudentofthemarkets.com/my-inner-trader/">here</a>.</div><p></p><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><h4 style="text-align: left;">A 2024 Roadmap</h4><div style="text-align: left;">A combination of factors is converging to draw a stock market roadmap for 2024. Instead of the more familiar seasonal pattern of “sell in May and go away”, I would advocate a strategy of buying in May. The main factors that affect this roadmap are election year seasonality and the timing of the first rate cut.</div><div style="text-align: left;"><br />Historically, the market has traced out a choppy pattern until May, followed by a rally into September, a pause and a rally into year-end. The market has so far outrun its seasonal pattern in 2024, with the warning that February has historically been weak during election years, according to <a href="https://twitter.com/NautilusCap/status/1752722108646355132" target="_blank">Nautilus Investment Research</a>.<br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdPoyGNa-uR_n2kuLTNDqsmNwWMx9leCIRdv6cWNomACCqvszSaCBQVAx8bbtzNV0wgb-8r4VgSMLMkEUUpHl8ycrqCpl1l5xv1N1cVtcd42dEZZ4Om1H3GhWT8k0mi9uO9mVNmYkXg43cqe3nfx1JcsfQ4i1JCFpXTUbtcD8ovEt2YaXAXw7xOyBz60AQ/s900/Election%20year%20patterns.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="654" data-original-width="900" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdPoyGNa-uR_n2kuLTNDqsmNwWMx9leCIRdv6cWNomACCqvszSaCBQVAx8bbtzNV0wgb-8r4VgSMLMkEUUpHl8ycrqCpl1l5xv1N1cVtcd42dEZZ4Om1H3GhWT8k0mi9uO9mVNmYkXg43cqe3nfx1JcsfQ4i1JCFpXTUbtcD8ovEt2YaXAXw7xOyBz60AQ/w400-h291/Election%20year%20patterns.jpg" width="400" /></a></div><br />The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/04/get-ready-to-buy-in-may/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-88899320679116905882024-02-03T10:17:00.000-08:002024-02-03T10:17:00.126-08:00How Trump's isolationism threatens long-term equity returnsNow that Donald Trump has become the presumptive Republican nominee for President, Wall Street is scrambling to model how a Trump White House may affect capital markets. A recent <a href="https://www.bloomberg.com/news/articles/2024-01-21/trump-s-2016-win-shook-markets-traders-won-t-get-fooled-again" rel="nofollow" target="_blank">Bloomberg article</a> summarized the consensus:<br /><ul style="text-align: left;"><li>Bond market: Expect rising yields from upward pressures on term premium.</li><li>Currencies: Rising yields will put a bid under the USD.</li><li>Equities: Stocks in limbo as it’s difficult to form a consensus.</li></ul><div style="text-align: left;">I wrote about the effects of a Trump victory about a month ago (see <a href="https://humblestudentofthemarkets.com/wp-content/uploads/2023/12/20240102-Politics-of-2024.pdf" target="_blank">What the Politics of 2024 Tell Us About 2025</a>) and highlighted the geopolitical risk from Trump’s foreign policy. Further analysis leads us to believe that Trump’s foreign policy could unravel the “Stocks for the Long Run” narrative popularized by Jeremy Siegel. This could have profound long-run implications for investors in their investment planning.</div><p style="text-align: left;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbawI1KiOjJRURc-KHh3rQPSz5fuEN8HRAJvuPpzrWSXoMC6VKJU-zl-nGv-imMxqBnVmtZtxSJpm8YheHEtSnBH5w1-rjOc1Z2AoEMpGlUzoDCJEUXU_7kJXZZ4arYorSpZpucIGpbBTvTpxpbWll3wU0ehsTW-7ZdahhYhDTAPBwWkaU_3LDCkDHL2vt/s550/Siegel%20Stocks%20for%20the%20long%20run.webp" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="364" data-original-width="550" height="265" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbawI1KiOjJRURc-KHh3rQPSz5fuEN8HRAJvuPpzrWSXoMC6VKJU-zl-nGv-imMxqBnVmtZtxSJpm8YheHEtSnBH5w1-rjOc1Z2AoEMpGlUzoDCJEUXU_7kJXZZ4arYorSpZpucIGpbBTvTpxpbWll3wU0ehsTW-7ZdahhYhDTAPBwWkaU_3LDCkDHL2vt/w400-h265/Siegel%20Stocks%20for%20the%20long%20run.webp" width="400" /></a></div><br /> <br /><div style="text-align: left;">Here’s why.</div><div style="text-align: left;"> </div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/02/03/how-trumps-isolationism-threatens-long-term-equity-returns/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-21216209194014548302024-01-31T13:17:00.000-08:002024-01-31T13:31:47.404-08:00I told you there would be volatility<div style="text-align: left;"><b>Mid-week market update:</b> I told you that there would be volatility (see <a href="https://humblestudentofthemarkets.blogspot.com/2024/01/numerous-wildcards-add-up-to-st.html" target="_blank">Numerous wildcards add up to ST volatility</a>). In light of signs of stretched positioning, the prudent course of action for traders is to step to the sidelines.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKoOadTx7btfVmTWd3JgEi-5nO43gEWn5RmnbWQnX60c8hyPmpbZl-HWN2YnB6oprvlE5rtdc0dcW_3utTBZ3_9Dv0fRwycAWqX_yACmQuxkxJPlNWBA2LLvVhrG7P4cK1sLaU4aZu2BWS8cj7sNTBB6jLCCDFu1sHPcMJmPJP8j3CTGl55wve3_cED0-0/s694/CTA%20positioning.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="517" data-original-width="694" height="297" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKoOadTx7btfVmTWd3JgEi-5nO43gEWn5RmnbWQnX60c8hyPmpbZl-HWN2YnB6oprvlE5rtdc0dcW_3utTBZ3_9Dv0fRwycAWqX_yACmQuxkxJPlNWBA2LLvVhrG7P4cK1sLaU4aZu2BWS8cj7sNTBB6jLCCDFu1sHPcMJmPJP8j3CTGl55wve3_cED0-0/w400-h297/CTA%20positioning.jpg" width="400" /></a></div><br />Here are the different sources of volatility that are buffeting the markets.</div><div style="text-align: left;"> </div>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/01/31/i-told-you-there-would-be-volatility/" target="_blank">here</a>.<br />Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-37571386344262076592024-01-28T10:07:00.000-08:002024-01-28T10:07:00.245-08:00Numerous wildcards add up to ST volatility<b>Preface: Explaining our market timing models</b> <div>We maintain several market timing models, each with differing time horizons. The "<b>Ultimate Market Timing Model</b>" is a long-term market timing model based on the research outlined in our post, <a href="https://humblestudentofthemarkets.com/2016/01/26/building-the-ultimate-market-timing-model/">Building the ultimate market timing model</a>. This model tends to generate only a handful of signals each decade.</div><div></div><div><br />The <b>Trend Asset Allocation Model</b> 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 <a href="https://humblestudentofthemarkets.com/trend-model-report-card/" target="_blank">here</a>.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghcjhENHE3bf1tL6mgQupLtKwoTgfl6ZxssrrSz_sFL5hPWryeJXGN-aWSE87__7RqLDf8rAw7INdHHGOtQb3FUZTHDiPWb18fG_HaQKTTjulc60FKUhEUOejILXwlcGvxDWzdgs7AUuWd3pw6KoEiCwRxDPokOnOSZbFVnv8ldCHm7I0kOsJrg9ETQYoD/s1421/Trend%20Model%20perf.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1032" data-original-width="1421" height="290" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghcjhENHE3bf1tL6mgQupLtKwoTgfl6ZxssrrSz_sFL5hPWryeJXGN-aWSE87__7RqLDf8rAw7INdHHGOtQb3FUZTHDiPWb18fG_HaQKTTjulc60FKUhEUOejILXwlcGvxDWzdgs7AUuWd3pw6KoEiCwRxDPokOnOSZbFVnv8ldCHm7I0kOsJrg9ETQYoD/w400-h290/Trend%20Model%20perf.png" width="400" /></a></div><br /><div><br /></div><div> <br /></div><div>My inner trader uses a <b>trading model</b>, 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 <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.</div><p></p><p></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYMlZ0hazn-oEJJWmDPF12-1hBGNRXH7sU5Lzx26DgnVeYB4Xy5pqCBtaJjDUHricdUBIODbNoE3KohEjnSgEfH4xzTf2S7fMuf0WQFCiGr0arRzzXyNLSfUI5w_wgzDGRyrhwAlW_3zmVl1DM_gFRdQpjts0aZu-HXwWukl0mPh6hSdxr58gRemkGFPho/s1424/Inner%20Trader.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1035" data-original-width="1424" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYMlZ0hazn-oEJJWmDPF12-1hBGNRXH7sU5Lzx26DgnVeYB4Xy5pqCBtaJjDUHricdUBIODbNoE3KohEjnSgEfH4xzTf2S7fMuf0WQFCiGr0arRzzXyNLSfUI5w_wgzDGRyrhwAlW_3zmVl1DM_gFRdQpjts0aZu-HXwWukl0mPh6hSdxr58gRemkGFPho/w400-h291/Inner%20Trader.png" width="400" /></a></div><br /><div style="text-align: left;"><br /></div><p>The latest signals of each model are as follows:</p><p></p><p></p><div><ul><li>Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*</li><li>Trend Model signal: Bullish (Last changed from “neutral” on 28-Jul-2023)*</li><li>Trading model: Bullish (Last changed from “neutral” on 17-Jan-2024)*</li></ul><i>* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.</i><br /><br /><b>Update schedule</b>: I generally update model readings on my <a href="https://humblestudentofthemarkets.com/">site</a> on weekends. I am also on X/Twitter at @humblestudent. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown <a href="https://humblestudentofthemarkets.com/trading-track-record/">here</a>.<br /><br />Subscribers can access the latest signal in real time <a href="https://humblestudentofthemarkets.com/my-inner-trader/">here</a>.</div><p></p><div style="text-align: left;"><br /></div><h4 style="text-align: left;">A time for caution</h4><div style="text-align: left;">As the S&P 500 tests the 4900 level, it faces a number of key technical, top-down macro and fundamental challenges. These challenges are wildcards to the near-term path of stock prices and form the potential for volatility in the coming week.</div><p style="text-align: left;"></p><div style="text-align: left;">From a technical perspective, some caution is warranted. We recently highlighted a short-term buy signal when NYSE McClellan Oscillator (NYMO) recycled from oversold to neutral. The “take profits” tripwire for this trading signal occurs when NYMO reaches a positive reading, which occurred last Thursday. If you were tactically long the market, it’s time to reduce risk. Don’t try to be a hero.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTietgrBY2tu3q4mkQeyU-4p3xeqzrfLovKPDME2PvLjI1YrBoRwe1s0w6hUv2nWUkOXwFnWiOjI86QEjNj8D3d0py5iOMhCsmRZ5vkUntfdySg3FwA2f2JazJyInbHr6a14E3W1pGkYvhd4V_55ygbuuhCRncxX7GvcWt3pmv0Yl8o1fxjpnYEoyTKjEI/s700/NYMO.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="421" data-original-width="700" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTietgrBY2tu3q4mkQeyU-4p3xeqzrfLovKPDME2PvLjI1YrBoRwe1s0w6hUv2nWUkOXwFnWiOjI86QEjNj8D3d0py5iOMhCsmRZ5vkUntfdySg3FwA2f2JazJyInbHr6a14E3W1pGkYvhd4V_55ygbuuhCRncxX7GvcWt3pmv0Yl8o1fxjpnYEoyTKjEI/w400-h240/NYMO.png" width="400" /></a></div> </div><div style="text-align: left;">The full post can be found <a href="https://humblestudentofthemarkets.com/2024/01/28/numerous-wildcards-add-up-to-st-volatility/" target="_blank">here</a>.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><h4 style="text-align: left;">Beat the price increase</h4><p>We
are announcing a 5% price increase on subscriptions, effective February
1, 2024. Existing subscribers will be grandfathered at their current
rates.</p><p>If you haven't subscribed, click this <a href="https://humblestudentofthemarkets.com/shop-2/?orderby=price" target="_blank">link</a> to beat the price increase.</p></div><p></p>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-78975611929760594562024-01-27T10:17:00.000-08:002024-01-27T10:17:00.256-08:00What are the contagion effects of China's wipeout?<div style="text-align: left;">The problems keep piling up in China. Weakening demographics, as her population shrank for a second consecutive year. Weak consumer spending. A record property downturn. Rising trade tensions.</div><p style="text-align: left;"></p><div style="text-align: left;">The drip-drip-drip of these glitches culminated in a massive stock market wipeout as over US$6 trillion has been wiped from the combined capitalization of the Chinese and Hong Kong markets since the 2021 market peak. As an illustration of the depth of the carnage, the Hang Seng Index fell to test levels seen at the 1997 handover to China. Beijing responded with a plan to order State Owned Enterprises to use its offshore currency reserves, which is estimated to be 2-trillion yuan, or US$278 billion, to buy Chinese stocks to prop up the market. In addition, the PBoC announced a half-point cut to the required reserve ratio on February 5 to provide greater liquidity to the financial system.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja-Jhz20ZbAQ4PBEdMKFiPtVJLjAYyjjLk2ruLBhhyphenhyphenz3sbuH2dRS6Jmcu5sUq2efDeEEmqEN7ZqQAMl1aRie8VszyQqxXZnjEkfrv8frQXH5ZN2rKHKoWg6H2LLgy1PaH3eK87APnoKkoc7z3QgxTMCysaHL4OjsAhZSHJP15sOJqVvzQT6kzswCOroDPS/s835/China%20wipeout.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="502" data-original-width="835" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja-Jhz20ZbAQ4PBEdMKFiPtVJLjAYyjjLk2ruLBhhyphenhyphenz3sbuH2dRS6Jmcu5sUq2efDeEEmqEN7ZqQAMl1aRie8VszyQqxXZnjEkfrv8frQXH5ZN2rKHKoWg6H2LLgy1PaH3eK87APnoKkoc7z3QgxTMCysaHL4OjsAhZSHJP15sOJqVvzQT6kzswCOroDPS/w400-h240/China%20wipeout.png" width="400" /></a></div> <br />For investors, the key question is what’s the effect of skidding stock prices in China and nearby Hong Kong on the rest of the world?</div><div style="text-align: left;"><br /></div><p>The full post can be found <a href="https://humblestudentofthemarkets.com/2024/01/27/what-are-the-contagion-effects-from-chinas-wipeout/" target="_blank">here</a>.</p><p><br /></p><h4 style="text-align: left;">Beat the price increase</h4><p>We
are announcing a 5% price increase on subscriptions, effective February
1, 2024. Existing subscribers will be grandfathered at their current
rates.</p><p>If you haven't subscribed, click this <a href="https://humblestudentofthemarkets.com/shop-2/?orderby=price" target="_blank">link</a> to beat the price increase.</p><p></p><p></p>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0tag:blogger.com,1999:blog-816559531110064247.post-26144861021637754592024-01-24T13:11:00.000-08:002024-01-24T13:16:55.023-08:00The market's upper BB roller coaster ride<div style="text-align: left;"><b>Mid-week market update</b>: The S&P 500 has been riding its upper Bollinger Band. Historically, upper BB rides haven't been all that bearish, but the current episode is occurring against a backdrop of negative RSI divergences.</div><div style="text-align: left;"> </div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVLhbTyNhAIzoYSeQa3m2QA1fAyGUHGEWIgdKvArPFbKKfZdI0i1yOFh47BH7Gb9Rq5ry50vdtZW_-zMGGg5TQjKpH4k11cDlpFRrGKT7FhKPyW5SubBY1EYRCs3XUSwL8fdhQ2Os6M6cuEV1xeyINx2dyscJKvk_mnHzQlQly7pSMARC0ZEV03C0Ga2ja/s700/SPX.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="530" data-original-width="700" height="303" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVLhbTyNhAIzoYSeQa3m2QA1fAyGUHGEWIgdKvArPFbKKfZdI0i1yOFh47BH7Gb9Rq5ry50vdtZW_-zMGGg5TQjKpH4k11cDlpFRrGKT7FhKPyW5SubBY1EYRCs3XUSwL8fdhQ2Os6M6cuEV1xeyINx2dyscJKvk_mnHzQlQly7pSMARC0ZEV03C0Ga2ja/w400-h303/SPX.png" width="400" /></a></div> <br /></div><div style="text-align: left;">While the S&P 500 may be on an upper BB ride, it promises to be a roller coaster.</div><p></p><p>The full post can be found <a href="https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=0&dy=0&id=p14108859841&listNum=1" target="_blank">here</a>.</p><p><br /></p><h4 style="text-align: left;">Beat the price increase</h4><p>We
are announcing a 5% price increase on subscriptions, effective February
1, 2024. Existing subscribers will be grandfathered at their current
rates.</p><p>If you haven't subscribed, click this <a href="https://humblestudentofthemarkets.com/shop-2/?orderby=price" target="_blank">link</a> to beat the price increase.</p><p></p>Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.com0