A Q2 global market review

Preface: Explaining our market timing models 

We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.

The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.

 

 

My inner trader uses a trading model, which is a blend of price momentum (is the Trend Model becoming more bullish, or bearish?) and overbought/oversold extremes (don't buy if the trend is overbought, and vice versa). Subscribers receive real-time alerts of model changes, and a hypothetical trading record of the email alerts is updated weekly here. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.

 
 

The latest signals of each model are as follows:

• Ultimate market timing model: Sell equities (Last changed from “buy” on 26-Mar-2023)*
• Trend Model signal: Neutral (Last changed from “bullish” on 17-Mar-2023)*
• Trading model: Neutral (Last changed from “bearish” on 15-Jun-2023)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

Update schedule: I generally update model readings on my site on weekends. I am also on Twitter at @humblestudent and on Mastodon at @humblestudent@toot.community. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.

Subscribers can access the latest signal in real time here.

 

A global market review

Now that the first half of 2023 is in the rear view mirror, let’s review how global equity markets performed. Here are the quick takeaways from a preliminary analysis of relative returns.

• U.S. equities were the leaders in Q2.
• Japan is becoming the new stealth leader, while Europe is pulling back.
• China and other emerging markets were weak on a relative basis.

However, there were more subtle indications if we drill into the details by region.

The full post can be found here.