Humble Student of the Markets

A Time for Caution

noreply@blogger.com (Cam Hui, CFA) — Sun, 29 Mar 2026 17:08:00 +0000

A Trend Model Status Report
My Trend Asset Allocation Model has performed remarkably on an out-of-sample basis by beating the 60/40 benchmark almost every year since inception. It outperformed a 60/40 benchmark while exhibiting 60/40 like risk.

The Trend Model applies trend-following principles to a variety of global equity markets and commodity prices to arrive at a composite score.

What is the model saying now?

The full post can be found here.

Some Final Words on the Market Outlook

noreply@blogger.com (Cam Hui, CFA) — Sat, 28 Mar 2026 17:46:00 +0000

This is my last strategy publication before my retirement at the end of March and I would like to conclude with some final words on the intermediate-term outlook for stocks. (I will be publishing a final technical analysis review tomorrow).

Let’s begin with the good news. My long-term timing model is still bullish on the U.S. stock market. As a reminder, this model flashes a buy signal whenever the monthly MACD of the broadly based NYSE Composite (bottom panel)

Ozan Tarman, vice chair of global macro at Deutsche Bank, revealed in a Bloomberg podcast that in speaking to global macro hedge funds, he concluded that the pain trade is a squeeze higher, though the left-tail of the return distribution is quite fat.

The full post can be found here.

A ZBT Buy Signal Retirement Gift?

noreply@blogger.com (Cam Hui, CFA) — Wed, 25 Mar 2026 20:09:00 +0000

Mid-week market update: The stock market's weakness last Friday moved the Zweig Breadth Thrust Indicator back to oversold and reset the count for a ZBT buy signal. Monday's strong recovery was day 1, and we've seen three consecutive days of strong breadth. Have the market gods decided to give me a ZBT buy signal as a retirement present?

Let's wait and see.

The full post can be found here.

A V- or W-Shaped Rebound?

noreply@blogger.com (Cam Hui, CFA) — Sun, 22 Mar 2026 17:09:00 +0000

Preface: Explaining our market timing models

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

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

My inner trader uses a trading model, which is a blend of price momentum (is the Trend Model becoming more bullish, or bearish?) and overbought/oversold extremes (don't buy if the trend is overbought, and vice versa). As this site is shutting down on March 31, 2026, my inner trader is retiring so that there will be no tradings outstanding at the end of the quarter. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 to 16-Jan-2026 is shown below, and the chart will no longer be updated.

The latest signals of each model are as follows:

Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*

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

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

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

The full post can be found here.

Explaining the Resilient S&P 500

noreply@blogger.com (Cam Hui, CFA) — Sat, 21 Mar 2026 17:51:00 +0000

Why is the S&P 500 so resilient? Brent oil prices have breached the $100 level, but the index has only fallen about -7% on a peak-to-trough basis. The apparent divergence has led to a number of Street economists and strategists to call for a deeper pullback based on rising recession risk.

From a top-down macro perspective, here are some key differences between the current surge in oil prices and past stock market behaviour based on commonly cited recent oil spike episodes. Most recently, the 12-Day War saw a brief spike in oil price, but the 52-week rate of change was negative, and the S&P 500 shrugged it off. When Russia invaded Ukraine in February 2022, the 52-week rate of change in oil prices was already elevated. In fact, the real surge in oil occurred about a year prior to the invasion. The S&P 500 was already tracing out a top prior to the onset of the war by breaching its 40-week MA before the invasion. By contrast, the S&P 500 only began a test of its 40 dma last week, three weeks after the onset of hostilities.

While I have some sympathy for the calls of equity market weakness and rising recession risk, here are some other reasons why the S&P 500 has been so resilient.

The full post can be found here.

Que Sera Sera

noreply@blogger.com (Cam Hui, CFA) — Wed, 18 Mar 2026 20:33:00 +0000

Mid-week market update: The words of the day seem to be patience and uncertainty. As the old Doris Day song goes, "Que Sera Sera". No one knows what will happen.

I've been monitoring the progress of major averages. Both the S&P 500 and the NASDAQ 100 staged brief breakdowns of support, though the NASDAQ 100 recovered. Most averages remain in their wedge patterns. One hopeful signs is the ability of non-U.S. markets to rally through their falling trend line, with the caveat that the sign of strength may be a fakeout much like the S&P 500 and the NASDAQ 100 late last week.

Much depends on the length of the war.

The full post can be found here.

TARP, 2026 Style

noreply@blogger.com (Cam Hui, CFA) — Mon, 16 Mar 2026 13:37:00 +0000

I have a constructive outside-the-box modest proposal, in light of all the recent hand wringing about how to open the Strait of Hormuz, the recent Economist cover, and the latest 60 Minutes story about the difficulties that the U.S. faces in opening the Strait.

Is it time for a TARP-style government financial engineering, 2026 style?

The full post can be found here.

Important Questions for Both Bulls and Bears

noreply@blogger.com (Cam Hui, CFA) — Sun, 15 Mar 2026 17:14:00 +0000

Preface: Explaining our market timing models

The latest signals of each model are as follows:

Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*

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

The Fog of War
As the stock market struggles with the daily fog of war headlines, it has arrived at a key crossroad. The accompanying chart shows the evolution of different major U.S. equity averages. We have some questions for both bulls and bears.

The obvious questions are whether the indices can hold support (solid lines) or rally above the falling trend lines (dotted lines). The first shot across the bow of the bulls are the S&P 500 and NASDAQ 100 violations of short-term support, depicted by arrows, but the break has not been fully confirmed by the other averages and last Monday’s panic outside day reversals are mostly holding (red rectangles). More importantly, how market internals evolve in the coming days and weeks will determine whether the bulls or bears have control of the tape.

A Recessionary Bear Ahead?

noreply@blogger.com (Cam Hui, CFA) — Fri, 13 Mar 2026 23:06:00 +0000

In the wake of Gulf War III, the odds of a U.S. recession in 2026 have spiked in the betting markets. Even though the implied recession probability has retreated, they are nevertheless elevated.

Economic recessions are bull market killers. What are the chances of an oil shock-induced recession? Here are the bull and bear cases.

The full post can be found here.

What Happened to the TACO?

noreply@blogger.com (Cam Hui, CFA) — Wed, 11 Mar 2026 20:11:00 +0000

Mid-week market update: I wrote on the weekend that the Trump Administration was on the verge of a TACO (Trump Always Chickens Out) pivot. The market had the hint of a TACO on March 9, when he told CBS: “I think the war is very complete, pretty much”, but changed his tune hours later: “we’ve already won in many ways, but we haven’t won enough.”

The TACO is being made. Here is why. Today is the second consecutive day that nationwide average gasoline prices are above $3.50 a gallon.

During past trade disputes, the TACO was accomplished with a simple Trump pivot because the opposing party was open to the pivot. This time, other belligerents in the conflict have other ideas, namely Iran and Israel.

The full post can be found here.

How Do You Say TACO in Farsi?

noreply@blogger.com (Cam Hui, CFA) — Sat, 07 Mar 2026 22:33:00 +0000

Preface: Explaining our market timing models

The latest signals of each model are as follows:

Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*

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

The TALO-TACO Cycle
Both the Pentagon and Israel have set expectations for a multi-week military campaign against Iran. I believe political pressures will shorten the war in a way that’s beyond the control of military planners. Rising financial market stress, rising bond yields, and surging equity and bond option risk will force Trump to shift from TALO (Trump Always Lashes Out) to TACO (Trump Always Chickens Out).

Here’s why.

The full post can be found here.

War and Peace: History Rhymes, But Which History?

noreply@blogger.com (Cam Hui, CFA) — Sat, 07 Mar 2026 18:33:00 +0000

It is said that history doesn’t repeat itself, but rhymes, but investors need to be careful about what history they study.

As I prepare for retirement at the end of March, I want to impress upon readers the importance of looking under the hood of past quantitative history studies in order to understand underlying assumptions.
Consider, for example, this timely study of U.S. equity returns after geopolitical and economic shocks. The accompanying table from Ryan Detrick of Carson Investment Research would lead to the conclusion that investors should ignore shocks and buy the dip, as the stock prices tend to shrug off short-term setbacks and rise over time.

A different table from Jeffrey Hirsch at Almanac Trader tells a slightly different story. Hirsch excluded some of the more minor shocks in his event study such as the Asian Financial Crisis and Brexit. Average and median returns are directionally similar inasmuch as stock prices tend to react to the initial shock and then rise afterwards, but the magnitude of the returns is dissimilar to the Detrick study. In addition, post-shock returns improve significantly if investors focus on the post Iran Hostage Crisis period. The worst of the initial short-term price shocks were attributed to World War II and the early days of the Cold War.

In short, how you choose your data sample will affect your return expectations.

The full post can be found here.

A Washout Bottom?

noreply@blogger.com (Cam Hui, CFA) — Wed, 04 Mar 2026 12:49:00 +0000

Mid-week market update: The S&P 500 ETF (SPY) traded out a possible reversal yesterday (Tuesday) when it opened down, fell, and recovered to close higher on the day. The move was accompanied by a positive divergence on the 5-day RSI and on above average volume. These are all signs of selling exhaustion and a capitulation bottom.

The full post can be found here.

A Cowardly Bull

noreply@blogger.com (Cam Hui, CFA) — Sun, 01 Mar 2026 18:00:00 +0000

Preface: Explaining our market timing models

The latest signals of each model are as follows:

Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*

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

Bullish, But…
My Trend Asset Allocation Model is bullish, so I am intermediate-term bullish. My Trend Model applies trend-following techniques to global stocks and commodity prices. The accompanying chart shows that the MSCI All-Country World Index (ACWI), ACWI ex- U.S., and commodity prices (all in USD) are in solid uptrends.

However, a number of cracks are appearing under the surface that are making me into a cowardly bull.

The full post can be found here.

Making Sense of the Citrini Debate

noreply@blogger.com (Cam Hui, CFA) — Sat, 28 Feb 2026 18:06:00 +0000

Citrini Research recently published a controversial report that rhetorically asked, “What if our AI bullishness continues to be right...and what if that’s actually bearish?”

Even though the authors qualified the report as “a scenario, not a prediction”, it ignited much debate among investors. As the work is labeled as speculative fiction, I am not inclined to address its points, other than to point out that it raises questions about the interaction between AI-driven productivity and employment.

In reaction, the market sold off after the report’s publication, but rebounded the next day. Software stocks, which had been under pressure over the disruptive fears of AI adoption, ended the week by stabilizing. Technology stocks broke a rising relative uptrend (dotted line) and they are testing a key relative support level.

The full post can be found here.

The NVIDIA Make or Break Moment

noreply@blogger.com (Cam Hui, CFA) — Wed, 25 Feb 2026 21:07:00 +0000

Mid-week market update: The major U.S. averages have been range bound for weeks. The only exception is the equal-weighted S&P 500, which has been in a steady uptrend but it has yet to break out through key resistance (dotted line). The market is coiling for a move.

As investors wait for the NVIDIA earnings report after the market close today, will that report be the make or break moment for market direction?

The full post can be found here.

A Market of Stocks, Not A Stock Market

noreply@blogger.com (Cam Hui, CFA) — Sun, 22 Feb 2026 18:32:00 +0000

Preface: Explaining our market timing models

The latest signals of each model are as follows:

Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*

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

The Hindenburg Stalemate
The market got another Hindenburg Omen again last week. As a reminder, the ominously sounding Hindenburg Omen signal is triggered whenever a bifurcated market in an uptrend loses price momentum. While some signals resolve in a benign manner, others have seen the market correct into major drawdowns.

The full post can be found here.

Could the "Lag 7" Crater the Economy and Market?

noreply@blogger.com (Cam Hui, CFA) — Sat, 21 Feb 2026 18:21:00 +0000

Now that the Magnificent Seven has definitively weakened and violated a key support level, the next question is whether the decline can be halted at the 200 dma. More ominously, the relative performance of these stocks is forming an inverted saucer top after violating a relative support level (bottom panel).

It’s time to consider and stress test what was once thought as unthinkable. Can a sustained breakdown of the Magnificent Seven and AI hyperscalers crash the market and the economy in the manner of the Dot-Com Bubble top?

The full post can be found here.

Drawing Lines in the Sand

noreply@blogger.com (Cam Hui, CFA) — Wed, 18 Feb 2026 21:09:00 +0000

Mid-week market update: While the equal-weighted S&P 500 has been in a well-defined uptrend, which in intermediate-term bullish, other major U.S. equity averages have been mired in trading ranges, which reveal a degree of uncertainty about short-term direction. In addition, the VVIX, or the volatility of the VIX, remains above the 100 level indicating continued uncertainty.

It's time to look under the hood and draw some lines in the sand for insights into short-term direction.

The full post can be found here.

What Comes After the Software Apocalypse?

noreply@blogger.com (Cam Hui, CFA) — Sun, 15 Feb 2026 18:15:00 +0000

Preface: Explaining our market timing models

The latest signals of each model are as follows:

Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*

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

A Software Apocalypse

The upward progress of the NASDAQ 100 has been hampered by the crash in software stocks, though semiconductors have held up well. Even though the index remains range bound, it violated a key relative support level (second panel) and relative breadth (bottom two panels) has been weak.

In light of the turmoil in software and technology stocks, it would be useful to conduct a market leadership review to see where we are in the market cycle.

The full post can be found here.

Twilight of the AI Bull

noreply@blogger.com (Cam Hui, CFA) — Sat, 14 Feb 2026 18:05:00 +0000

We should all have seen it coming. At the end of 2025, Time Magazine named its person of the year as “the architects of AI”. This was the classic example of the contrarian magazine cover indicator.

As well, U.S. investors who watched the Super Bowl also saw a flood of AI-related TV commercials. Welcome to the 2026 AI Super Bowl. Tech ad spend was double the level of the “Crypto Bowl” in 2022, and we know what happened to cryptocurrencies in that year.

Companies like Anthropic, Genspark, OpenAI, and Wix, none of which are cash flow positive, spent big money to purchase expensive media during the Super Bowl to convince viewers that their product was going to change their lives. Not to mention ad spends by established players like Amazon, Google and Meta.

The flood of AI-related ads is reminiscent of the ad spend during the Super Bowl in 2000 at the top of the NASDAQ bubble. In 2000, 14 internet start-ups bought Super Bowl ads at $2.2 million per spot. Are you old enough to remember Pets.com? Yes, the company spent 1.2 million on Super Bowl media.

History doesn’t repeat itself, but rhymes.

The full post can be found here.

Vulnerable to a Setback

noreply@blogger.com (Cam Hui, CFA) — Wed, 11 Feb 2026 21:05:00 +0000

Mid-week market update: The delayed Jobs Report came in much higher than expectations this morning. The knee-jerk reaction in the pre-opening hours was risk-on, but the market reconsidered its view and pulled back after the open.

Once again, the S&P 500 has failed to break out to the upside, though the equal-weighted S&P 500 achieved an all-time high, and non-U.S. stocks are in a well-defined uptrend. The VVIX, or the volatility of the VIX, remains above the key 100 level, indicating continued market anxiety.

I interpret these conditions as a high degree of vulnerability to a short-term setback.

The full post can be found here.

The S&P 500 Battle at the 50 dma

noreply@blogger.com (Cam Hui, CFA) — Sun, 08 Feb 2026 18:07:00 +0000

Preface: Explaining our market timing models

The latest signals of each model are as follows:

Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*

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

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

Subscribers can access the latest signal in real time here.

Alpha Unwind or Beta Faceplant?

The S&P 500 briefly broke down below its 50 dma and bounced. It’s near the bottom of a trading range. It recycled after becoming oversold on the 5-day RSI, but the VVIX, or the volatility of the VIX, is above 100, indicating heightened anxiety.

I have two interpretations of the market narrative. Recent events such as the silver price crash and the software stock rout could be just indications of healthy internal in an ongoing bull, or these setbacks could be alpha unwinds that are leading to risk manager-induced liquidations that result in a beta faceplant for asset prices.

The full post can be found here.

From TACO to Big MAC

noreply@blogger.com (Cam Hui, CFA) — Sat, 07 Feb 2026 18:32:00 +0000

By now, investors should know about the TACO (Trump Always Chickens Out) trade where Trump reverses on one of his initiatives based on the market’s reaction. Former Fed economist Claudia Sahm recently introduced an additional political constraint on Trump’s actions. The Big MAC (Midterms Are Coming) factor has also forced some reversals.

I am introducing a Big MAC dashboard as a tool for investors to monitor possible changes in policy.

The full post can be found here.

The Dreaded Hindenburg Omen

noreply@blogger.com (Cam Hui, CFA) — Wed, 04 Feb 2026 21:09:00 +0000

Mid-week market update: In case you missed it, the dreaded Hindenburg Omen has reared its ugly head again. In plain English, the Hindenburg Omen is signaled when a market with bifurcated breadth sees a rollover in price momentum. Single day signals tend not to be very useful, but clusters of signals may foreshadow future drawdowns.

As the accompanying chart shows, past Omen signals have been hit-and-miss. The latest cluster saw three consecutive signals in the last three days.

How should investors interpret the latest Omens?

The full post can be found here.