We look at the variation in the performance of the weekly and high-alpha strategies due to the choice of MOC or MOO trade orders.

For the latest performance update and more details about the strategies, see this article.

The last date for all backtests is August 21, 2026. An “O” next to the strategy name means trades are executed at the next open, and a “C” means they are executed at the close as soon as the signal is generated.

Note that, in the case of MOC orders, it is important to implement an algorithm that indicates whether a signal will be generated at the close of the week or month. In most cases, the signal can be determined well in advance: in the case of weekly strategies, maybe a day in advance, and in the case of monthly strategies, often several days in advance. However, there are rare cases when the signal can only be decided after the close, and MOO orders must be used.

The objective of this study is to calculate the theoretical differences in strategy performance when using MOO or MOC orders.

Weekly Strategies

Summary: Performance for Dow-30 stocks is better with MOO orders, but for ETFs it is better with MOC orders.

Monthly Strategies

Summary: As the timeframe increases, we expect convergence between MOO and MOC orders. The results are slightly better with asset ETFs (CSMO, SBRO) and similar for sector ETFs in the stock market.

Bundle results

Summary: Weekly CAGR performance is better by 40 basis points with MOO orders, while monthly performance is better by 60 basis points with MOC orders.

Conclusion

In the limit of large samples, we expect no differences between MOO and MOC orders for weekly and monthly strategies due to the slow timeframe and large payoff ratios. The differences we have observed are statistically indistinguishable. However, in the short term, there may be differences due to random price paths that favor one type of order over another.

Disclaimer: The strategies are provided for informational purposes only and do not constitute investment advice or actionable content. We do not warrant the accuracy, completeness, fitness, or timeliness of any strategy for any particular purpose. Under no circumstances should the strategies be treated as financial advice. Please read our Disclaimer and Terms and Conditions.

Weekly and Monthly Strategies: MOO vs. MOC Trade Performance was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 includes a review of the performance of a pair trade from a weekly report published two months ago.
Section 3 reviews the performance of our tactical and strategic allocations.
Section 4 discusses the rebound in gold and Bitcoin.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, August 21, 2026:

• The weekly strategies tactical ensemble (WRE) fell 1.4%. Year-to-date: +20.2%
• The Price Action Lab strategic allocation (PALSA) gained 0.1%. Year-to-date: +21.4%.
• The SPY ETF fell 1.4%. Year-to-date: +12.9%

For the open positions and any new signals of WRE, see Section 3. The WRE tactical allocation is up 26.4% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include in Section 3 the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 36.3% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

Review of long biotech-short semiconductor pair trade

In the report for the week ending June 26, 2026, we wrote about the long biotech-short semiconductor pair trade using IBB and SMH ETFs. The trade has gained 11.1% from the open on June 29, 2026, as of the close of this week.

The crowded semiconductor trade (SOXX, SMH) is under selling pressure, while biotech (IBB, XBI) is benefitting from the use of AI. Pharmaceuticals (XLV) are receiving a positive spillover drift from biotech.

There are still high odds that the profitability of the long IBB-short SMH pair trade will increase. Caveat emptor: While semis are a crowded trade, biotech has always been a speculative trade. The pair trade still looks attractive, but sound risk management dictates a small allocation.

Analysis of S&P 500 index price action

The S&P 500 index fell 1.4% this week in what may appear as a short-term topping action. Below is a scenario we believe has high odds and conditions that will render it invalid.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

If you found this article interesting, you may follow this blog via RSS, email, or Twitter.

Weekly Market Report: Gold and Crypto was originally published on Price Action Lab

We updated the performance of the weekly and monthly strategy bundles to August 19, 2026. Year-to-date, the weekly strategy bundle is up 14.1% without leverage, and the monthly strategy bundle is up 26.1%.

While a few daily strategies are down year-to-date due to random price action in this timeframe, with the 10-strategy bundle up about 1%, weekly and monthly strategies have performed quite well, and this supports what some traders already know: on top of asset and strategy diversification, it is also important to have timeframe diversification, as different market regimes impact price action in unpredictable ways.

The weekly strategy bundle is up 14.1% year-to-date.

Click here for more details. 

The monthly strategy bundle, also called the High Alpha bundle, is up 26.1% year-to-date. These strategies use 2x leverage. Without any leverage, the bundle is up 15.6% year-to-date.

Click here for more details. 

Related article on August 24, 2026: Click here.

Special offer

The retail price for the weekly bundle is $4,495, and for the monthly bundle it is $3,495. For a limited-time-only offer, we offer both bundles at a 30% discount, and the final price is $5,595. This special offer will expire on August 30, 2026, at midnight.

We provide the rules only in plain English and simple math. We do not provide any code. The rules we provide are sufficient for programming the strategies on a trading platform. The strategies are not data-mined and have simple rules. Do not expect anything overly complicated. Contact us if you decide to take advantage of this limited-time offer.

Disclaimer: The strategies are provided for informational purposes only and do not constitute investment advice or actionable content. We do not warrant the accuracy, completeness, fitness, or timeliness of any particular purpose of any strategy. Under no circumstances should the strategies be treated as financial advice. Please read our Disclaimer and Terms and Conditions.

Weekly and Monthly Strategies Update was originally published on Price Action Lab

There are three essential features of market crash predictions:

1. Timing of the correction
2. Drawdown depth
3. Recovery period

A 30% correction with a recovery period of about six months, as seen during the 2020 pandemic, is different from a 48% correction with a recovery period of seven and a half years, as in the 1970s, or the dot-com correction, which had a 47% drop lasting a little more than seven years. Here is a chart that shows the S&P 500 index recovery periods and magnitude of drawdowns.

If investors know that a correction will be short-lived, they can stay invested in the market. If the forecast is for a protracted correction, equity investors may elect to move to cash or reduce exposure to equities and wait for the right opportunity to deploy capital again.

If someone on social media or in financial media and blogs argues that a correction is coming, they are not telling me anything useful, other than perhaps being involved in a clickbait campaign. Every investor with skin in the game knows that a correction will eventually arrive. The three features listed above are essential to guide decisions: timing, depth, and duration. As far as I know, no one has ever predicted all three features in advance. Therefore, predictions of stock market crashes are not useful in guiding investment decisions. Simple timing strategies can probably provide value and protection. Click here for a recent article on the blog app.  

Premium Content

Why Most Market Crash Predictions Are Useless was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance. We consider asset ETFs and the current market trends and dynamics and their effect on strategies.
Section 3 reviews the performance of our tactical and strategic allocations.
Section 4 discusses how skipping the noise is the first step to successful trading and investing.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, August 14, 2026:

• The weekly strategies tactical ensemble (WRE) gained 1.6% with equal allocation. Year-to-date: +21.9%
• The Price Action Lab strategic allocation (PALSA) gained 1.6%. Year-to-date: +21.2%.
• The SPY ETF gained 0.4%. Year-to-date: +14.4%

For the open positions and any new signals of WRE, see Section 3. The WRE tactical allocation is up 28.7% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include in Section 3 the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 36.1% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

The S&P 500 index is up 4% in the first two weeks of August, with most gains coming in the first two trading days of the month.

Specifically, the S&P 500 index gained 3.3% in the first two days of August and received a solid boost for a month that historically has delivered flat returns on average. However, the following chart challenges the perception that August has not contributed much to the stock market’s total returns.

If we use Dow Jones Industrial Average prices to go further back, we find out that August delivered positive returns for 15 consecutive years between 1922 and 1936! In fact, August was profitable even during the worst crash of the US stock market in the early 1930s. Therefore, the perception about August being a flat month has been mainly due to sampling bias. We have identified the source of the bias below.

In August 1998, the S&P 500 index fell 14.5% due to the Russian ruble crisis. The 1998 loss is the largest for the month of August for the S&P 500 index since 1945 and has skewed the performance to flat, although the index has been up 56.3% of the time for this particular month. Note that including month-to-date returns, the index has been up in August for three consecutive years, and since 1945 it has made several three-year winning streaks for the particular month. Therefore, we will ignore any references to August seasonality based on average flat returns. The index may finish this month up or down, but seasonality and calendar effects are not significant.

Below is an excerpt from this week’s Market Signals update, which references the August 1998 Russian ruble crisis and the US stock market correction.

August brings back memories of market chaos to some older investors due to the 1998 Ruble crisis, when the S&P 500 fell 14.5% for the month, with the bulk of the losses occurring in three days, from August 27 to August 31, 1998. The sell-off wiped out many leveraged traders and investors who had made large bets that the dot-com rally would continue undisturbed. The index avoided an official declaration of a bear market (-20% from the previous high) by less than 1% and recaptured the July 1998 highs by late November of the same year, but many market participants had already received margin calls.

There were two main types of losers: (A) Those who panicked and sold everything at a significant loss, and (B), those who remained in the market but then sold everything in early October 1998, when the market tested again the lows of August, in fear of a continuation of the sell-off and a bear market.

We are not concerned about price action in this month due to seasonality. We are more concerned about the following potential divergences.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

If you found this article interesting, you may follow this blog via RSS, email, or Twitter.

Weekly Market Report: Skipping the Noise was originally published on Price Action Lab

A few changes and additions to the daily mean reversion are coming. The subscription will be closed to new members starting August 14, 2026, for about three months.

For next year, we plan to combine the main mean-reversion strategy and the bonus momentum and mean-reversion switching strategy, as the latter provides diversification in both assets and signal generation. The consolidation will simplify daily reporting and signal access.

We also plan to add a bonus daily long-only mean-reversion strategy for Dow-30 stocks. We will probably add the signals in October, with the official start in January 2027. The strategy trades up to three Dow-30 stocks in a long-only mean-reversion mode. Below is a backtest of the strategy.

We used the Norgate Data series with Dow-30 delistings for the backtest. The strategy exhibits a certain degree of robustness with performance metrics that will allow increased diversification for the daily mean reversion signals. Specifically, the beta is 0.38 and the correlation is 0.44, while the Sharpe ratio is 0.91.

New sign-ups for the daily mean-reversion subscription will be closed starting August 14 for about three months. If you would like us to inform you when the subscription becomes available, please contact us.

About the risks of mean-reversion strategies

Mean-reversion strategies are risky because the signals go against the short-term trend. Most strategies do not use a stop loss because it destroys profitability.

Mean-reversion strategies are for professional traders who understand risk and can manage it effectively. Amateur traders can lose money even when using a profitable mean-reversion strategy because of fear of taking signals that go against the short-term trend. Usually, professionals allocate a small percentage of capital to mean-reversion strategies.

Disclaimer: Investing in any market, including exchange-traded products (ETPs, ETFs, and ETNs), could result in a total loss of capital. We only provide the daily mean reversion signals (Signals) for informational purposes, not as investment advice or actionable content. We do not warrant the accuracy, completeness, fitness, or timeliness of the Signals for any particular purpose. You should never treat the Signals as financial advice. At times, we may hold long or short positions, calls or puts, in several exchange-traded products mentioned in these reports. Furthermore, the author of this website is not a registered financial adviser. Before subscribing, please read our Disclaimer and Terms and Conditions.

Mean Reversion Subscription Update was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance. We consider asset ETFs and the current market trends and dynamics and their effect on strategies.
Section 3 reviews the performance of our tactical and strategic allocations.
Section 4 argues that deflation may be an inevitable policy choice and there are two scenarios, the good and the bad.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, August 7, 2026:

• The weekly strategies tactical ensemble (WRE) gained 2.6% with equal allocation. Year-to-date: +20%
• The Price Action Lab strategic allocation (PALSA) gained 3.9%. Year-to-date: +19.3%.
• The SPY ETF gained 3.5%. Year-to-date: +14%

For the open positions and any new signals of WRE, see Section 3. The WRE tactical allocation is up 26.2% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include in Section 3 the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 32.8% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

The chart below shows the recent price action in the stock market, and we briefly discuss its impact on market participants and trading strategies.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

If you found this article interesting, you may follow this blog via RSS, email, or Twitter.

Weekly Market Report: Unavoidable Deflation was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance. We consider asset ETFs and the current market trends and dynamics, focusing on potential signals hidden in price action.
Section 3 reviews the performance of our tactical and strategic allocations.
Section 4 discusses the latest decision by the Fed to keep rates unchanged and the references to a “magic wand.”

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, July 31, 2026:

• The weekly strategies tactical ensemble (WRE) fell 0.7% with equal allocation. Year-to-date: +17%
• The Price Action Lab strategic allocation (PALSA) fell 0.4%. Year-to-date: +14.8%.
• The SPY ETF gained 1.1%. Year-to-date: +10.1%

For the open positions and any new signals of WRE, see Section 3. The WRE tactical allocation is up 22.2% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include in Section 3 the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 25.2% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

A notable development in July was the sell-off in semiconductor stocks. Specifically, the SMH ETF fell 17.6% in July. Let us add some context here to counter the gloom and doom on financial social media and in the blogosphere.

In the three-month period from April to June, the SMH ETF gained 71.7%, as shown in the bottom pane of the chart. Despite the large decline in the SMH ETF in July, the magnitude was less than three standard deviations below the mean of monthly returns, as shown in the second pane of the chart. A drop below four standard deviations, or about -27%, could serve as a signal of a reversal of the uptrend. Therefore, up to this point, the decline in July could be classified as profit-taking, rather than as a signal of a top. Anything can happen in the coming months, including a major decline or even new highs. Predictions are impossible, and we can only respond to price action, hopefully with the lowest possible lag.

The 17.6% drop in July corresponds to a 38.2% Fibonacci retracement level of the uptrend that started in April and ended on June 22, 2026, with an intermediate test of the 50% retracement level, as shown in the chart below.

As we have noted several times in these reports, we use technical analysis in a descriptive sense to describe what happened rather than predicting future price movements and their causes.

Another major development in July that has several important implications in investing and portfolio allocation, but more importantly in economic forecasting and policymaking, was the rally in long-duration bond yields.

We will focus on the 30-year bond yield chart above, and the discussion also relates to Section 4 of this report. Note that the 30-year bond yield is at 19-year highs. On March 9, 2020, during the pandemic, the yield reached its all-time low, at 0.937%, and since then, there has been an uptrend toward the close of this month at 5.275%.

The doom and gloom linked to the rise in yields is difficult to ignore. I received a text message from a friend this week: “Did you notice the rise in bond yields?” My friend was in a panic mode, probably induced by some article or podcast, where the central themes are the imminent destruction of the US economy, the collapse of the global financial system and the US dollar, and related nonsense designed to generate clicks. For the experienced eye, it is fairly straightforward to see why this rise in yields is not a major concern. However, we need to add some important context to the chart, as shown below.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

If you found this article interesting, you may follow this blog via RSS, email, or Twitter.

Weekly Market Report: A Magic Wand was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance. We look at popular ETFs and the current market trends and dynamics, with a focus on potential signals that are hidden in price action.
Section 3 reviews the performance of our tactical and strategic allocations.
Section 4 looks at the performance of REIT ETFs and the potential of a short trade.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, July 24, 2026:

• The weekly strategies tactical ensemble (WRE) gained 0.9% with equal allocation. Year-to-date: +17.8%
• The Price Action Lab strategic allocation (PALSA) gained 0.8%. Year-to-date: +15.3%.
• The SPY ETF fell 0.6%. Year-to-date: +8.9%

For the open positions and any new signals of WRE, see Section 3. The WRE tactical allocation is up 23.4% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include in Section 3 the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 26% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

We start with a brief review of the performance of the short trade in the EWY ETF from the June 21, 2026, weekly report.

This week, the EWY ETF gained 0.3%. Since June 22, 2026, the EWY ETF has fallen 25.7%. Last week, we wrote:

In hindsight, the EWY short was a good call, as it timed the market peak well.

Here is the updated EWY ETF chart:

Although there may be potential for additional downside, we believe most traders who timed the top well have already covered, and we will not provide updates in future reports, except in the case of a significant development.

Below, we focus on another price action development in the US stock market that has caused large losses for some long options traders, primarily due to theta decay.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

If you found this article interesting, you may follow this blog via RSS, email, or Twitter.

Weekly Market Report: Real Estate was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance. We look at popular ETFs and the current market trends and review the performance of the short trade in EWY ETF from the June 21, 2026, weekly report, with a 25% gain.
Section 3 reviews the performance of our tactical and strategic allocations.
Section 4 discusses the main driver of the current disinflation dynamic and assets that may benefit in the event it falters.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, July 17, 2026:

• The weekly strategies tactical ensemble (WRE) fell 2.6% with equal allocation. Year-to-date: +16.7%
• The Price Action Lab strategic allocation (PALSA) fell 3.1%. Year-to-date: +14.4%.
• The SPY ETF fell 1.5%. Year-to-date: +9.6%

For the open positions and any new signals of WRE, see Section 3. The WRE tactical allocation is up 21.9% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include in Section 3 the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 24.5% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

Below, we review the performance of the short trade in EWY ETF from the June 21, 2026, weekly report.

Since June 22, 2026, the EWY ETF has fallen 25.8%. In hindsight, the EWY short was a good call, as it timed the market peak well. Prices have fallen to support near $154.

Below is a quote from the June 21, 2026, weekly report:

As we have noted in the past, we are not fans of technical analysis. However, Fibonacci retracements may provide some general idea of potential support levels, but only in the case of a panic selloff. In the event a selloff starts in EWY, the 50% Fibonacci retracement level of the rally that started in April of this year is 23% below current prices.

The chart below shows the updated Fibonacci levels.

Prices found support at the 61.8% retracement level of the uptrend that started in April of this year, and a rebound followed. Although the odds of additional downside are high, volatility and chop may increase, especially as price action enters oversold territory. Therefore, the prudent action now is to cover the short while being ahead.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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Weekly Market Report: Transitory Disinflation was originally published on Price Action Lab

On October 19, 1987, IBM crashed 24.7%. On July 14, 2026, the stock plunged 25.2%. We include a list of Dow-30 stocks currently in the index that have dropped more than 15 standard deviations on a single day.

On July 14, 2026, IBM stock experienced its worst one-day drop since its IPO and in the past 77 years, following disappointing earnings and comments by the CEO about a failure to adapt to the new AI regime.

Based on the available sample since 1950, the -25.2% daily drop was a move of more than minus 16 standard deviations! The October 19, 1987, -23% drop was about minus 15 standard deviations based on the available sample of daily returns.

Note that all references to standard deviations in this article are only in the context of comparing market moves, not estimating or inferring probabilities or frequencies of events. This clarification may be required due to the increased level of confusion on financial social media and blogs about the meaning and use of standard deviation.

Below is a list of current Dow-30 constituents that have crashed more than 15 standard deviations of their available sample.

Most of the events occurred on the day of the 1987 crash. The AAPL stock had the worst one-day drop of current Dow-30 constituents during the dot-com bear market.

Left-tail events in equities occur more frequently than statistics based on normality predict, according to the power-law distributions of daily returns. As the number of tail events increases, forecasting the forward returns of individual stocks becomes even more difficult. Volatility negatively impacts performance by imposing a drag.

What about forward returns after crashes? In the late 1990s, I knew some people who were looking for large drops in stocks and were buying the dip with size. They were driving expensive sports cars and renting summer homes in elite resorts. Suddenly, they lost everything. Maybe it was around the AAPL drop with a 21-day forward return of about -25%. Buying left tails may work well until they impose a significant risk event, especially when margin is used.

Premium Content

IBM Stock Suffers 1987-Style Crash—This Time on Steroids was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance. We look at popular ETFs and the current market trends and also review the performance of a short and a pair trade (long/short) from two recent weekly reports.
Section 3 offers details about the performance of our tactical and strategic allocations.
Section 4 discusses divergences in stock indices to clarify a few commonly held misconceptions.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, July 10, 2026:

• The weekly strategies tactical ensemble (WRE) gained 1.1% with equal allocation. Year-to-date: +19.9%
• The Price Action Lab strategic allocation (PALSA) gained 1.1%. Year-to-date: +18.1%.
• The SPY ETF gained 1.4%. Year-to-date: +11.3%

For the open positions and any new signals of WRE, see Section 3. The WRE tactical allocation is up 26.2% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include in Section 3 the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 30.7% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

Below, we review the performance of a pair trade from the June 28, 2026 report and a short trade from the June 21, 2026 report. Both trades are interesting because they reflect the impact of price action trends and the possibility of a regime change. The pair trade is up about 1.3%, while the short trade is up more than 16% due to nearly precise timing. Both trades are now facing fierce resistance from the predominant market regime, which, in the case of the pair trade, has persisted for about 10 years and has generated returns in excess of 2,400% in one of the ETFs.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

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Weekly Market Report: Divergences was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance. We look at popular ETFs and current market rotation trends and also review the performance of two strategic allocations with some interesting statistics.
Section 3 offers details about the performance of our tactical and strategic allocations.
Section 4 discusses the two primary trends that will impact valuations forward and drive equity markets to all-time highs or cause a stock market apocalypse.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Thursday, July 2, 2026:

• The weekly strategies tactical ensemble (WRE) fell 1.2% with equal allocation. Year-to-date: +18.7%
• The Price Action Lab strategic allocation (PALSA) fell 1.5%. Year-to-date: +16.8%.
• The SPY ETF gained 2.2%. Year-to-date: +9.8%

For the open positions and any new signals of WRE, see Section 3. The WRE tactical allocation is up 24.6% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 28.5% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

In this weekly report, we will look at how price action this year has impacted the performance of two popular strategic allocations. Many investors consider the results puzzling. More surprises of this sort are likely going forward, due to a partial, at least, failure of macroeconomic analysis to factor in price action dynamics in a framework that suffers from anchoring bias amid a fundamental regime change driven by rapid developments in artificial intelligence and geopolitics, as we will discuss in more detail in Section 4 of this report.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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Weekly Market Report: The Two Horsemen was originally published on Price Action Lab

Post-hoc trading claims have been around for as long as markets exist. Financial social media and the ease of generating and distributing content have caused an explosion in post-hoc trading claims recently. In this article, via the use of a systematic strategy, I show how post-hoc trading claims can result in significant outperformance of a benchmark due to implied look-ahead bias.

Post-hoc trading claims are different than look-ahead bias in the sense that there is no direct leakage of future information in backtesting, but the trade price is adjusted after the fact to take advantage of momentum moves and boost paper gains.

Whereas look-ahead applies to systematic trading and backtests and is a serious bias, post-hoc execution applies to discretionary trading that lacks well-defined trade entry levels.

“We bought the SPY ETF at the open today” could be a post-hoc claim of trade execution with the objective of boosting fake paper gains, especially if the claim is made during the day and, in the meantime, the market has gained. “We will buy the SPY ETF tomorrow” is another vague claim that can lead to post-hoc claims depending on the direction of price action.

Not all post-hoc execution claims are fake, but when they are the result of discretionary decisions, they can be questionable. For example, a claim of a trade around the low of the day may sound suspicious if the SPY ETF opens below the previous close and then surges higher during the day. Note that systematic strategies generate the trades for the market’s next open or same-day close, and there can be no dispute, but arbitrary claims of execution after the fact can be questionable, especially among experienced traders who have seen them before.

After this brief introduction, I will focus on the results of a quantitative strategy that demonstrates how post hoc selection of trading entries can lead to fake outperformance. The strategy involves look-ahead bias because it trades at the open with knowledge of the future and specifically that the market closes above the 200-day moving average.

The base case of the strategy is to go long the SPY ETF at the next open when the closing price crosses above the 200-day moving average and to exit the trade at the next open when the closing price falls below the average. Below is the chart with the backtest results from inception of the SPY ETF to June 30, 2026, with fully invested equity.

As we will see in the comparison table after the backtest results, this strategy has generated 104 trades with a 0.70 Sharpe ratio. This type of trend-following strategy has certain inherent risks we have discussed in other articles on this blog, and for this reason we would never trade it in its simplistic form, but it is used here to illustrate a point.

Next, suppose that instead of the next open, we use the open of the day if the close ends above the moving average, and this rule introduces look-ahead bias. Below are the backtest results.

The results show significant improvement in performance, as expected due to look-ahead bias, with a Sharpe ratio near 1 and outperformance of buy and hold, as we will see in the comparison table below. The outperformance confirms why some discretionary paper traders claim an early entry post-hoc: usually there is continuation from the open that results in higher performance. We do not claim that discretionary traders follow this particular strategy; the claim is that some post-hoc claims of an earlier entry can result in outperformance.

When both the entry and exit occur at the open upon crossing above the 200-day moving average, the outperformance disappears due to the absence of look-ahead bias. Below are the backtest results.

The performance when both the entry and exit occur at the open, if it crosses above or below the moving average, is worse than the original case of waiting for confirmation and entering the strategy at the next open, and this discrepancy is mainly due to whipsaw and more losing trades.

The table below compares the three backtest versions with buy and hold.

* Entry on open if the close crosses above the 200-day moving average, and exit at the next open.
** Entry/Exit if the open crosses above/below the 200-day moving average.

But why select a 200-day moving average? Below is the performance of the 21-day moving average cross, with the entry and exit at the next open, for illustration purposes only.

Next, the trade is entered at the open if the close of the day is above the 21-day moving average, which introduces look-ahead bias The exit is at the next day’s open price if  the closing price crosses below the 21-day moving average.

The result was expected due to look-ahead bias. In this case, the trade sample grew to 483, which provides us more confidence that claims of trade execution made after the fact boost paper gains.

Summary: In discretionary trading, those who paper trade often make post-hoc claims of an earlier trade entry, which reflects look-ahead bias. The above results indicate that entering trades on the same day open, when the close crosses above the 200-day or 21-day moving average, leads to significant outperformance due to look-ahead bias. The results also show that those who claim post-hoc of an earlier entry when significant moves in the markets occur can book significant paper profits, but the results are not real.

Post-Hoc Trading Claims: Creating Fake Paper Gains was originally published on Price Action Lab

This premium report includes an update on the monthly rebalanced Market Signal strategies. A Market Signals subscription provides access to the entire report.

Positions and strategy performance: Tuesday, June 30, 2026

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Market Signals for July 1, 2026 was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance. We look at popular ETFs, current market rotation trends, low volatility versus high beta performance, and the perils of using a technical indicator that has historically generated false signals.
Section 3 offers details about the performance of our tactical and strategic allocations.
Section 4 discusses the recent performance in biotech and potential drivers.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, June 26, 2026:

• The weekly strategies tactical ensemble (WRE) fell 1.2% with equal allocation. Year-to-date: +20.3%
• The Price Action Lab strategic allocation (PALSA) fell 2.1%. Year-to-date: +18.5%.
• The SPY ETF fell 2.4%. Year-to-date: +7.5%

For the open positions and any new signals of WRE, see Section 3. The WRE (Lev) tactical allocation is up 27.3% year-to-date with 1.6x leverage to match the SPY ETF volatility. We also include the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 31.5% year-to-date.

2. Price action analysis, weekly market summary, and market forecast

Starting with this week’s report, we bring back the cash indices for our weekly recap, and we also focus on our watchlist of 32 popular ETFs. We will also start paying attention to key divergences in asset and index performance because the signal-to-noise ratio could be higher during market stress periods than that of price action indicators.

We start with a chart of a popular quantitative indicator of the relative performance of two indices, which is regularly featured in financial social media and the blogosphere, but it is a tricky one that can generate misleading results. Then, we focus on the relative performance of the two indices.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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Weekly Market Report: Biotech was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance and an analysis of the drivers of the current market dynamic. We also include an update of our inflation chart with a discussion about current policy and economic ramifications.
Section 3 details the performance of our tactical and strategic allocations.
Section 4 discusses a potential short position that could be the trade of the decade.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Thursday, June 18, 2026:

• The weekly strategies tactical ensemble (WRE) gained 1.6% with equal allocation. Year-to-date: +21.8%
• The Price Action Lab strategic allocation (PALSA) gained 1.6%. Year-to-date: +21.0%.
• The SPY ETF rose 0.9%. Year-to-date: +10.1%

For the open positions and any new signals of WRE, see Section 3. We also include the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 35.8% year-to-date. The WRE (Lev) tactical allocation is up 29.7% year-to-date with 1.6x leverage to match the SPY ETF volatility.

2. Price action analysis, weekly market summary, and market forecast

Below is a chart showing price action that could be problematic for the US stock market, and the signal, if it is not invalidated soon, may be imminent.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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Weekly Market Report: The Short of the Decade was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance and an analysis of the drivers of the current market dynamic. We discuss price action during regular trading hours for various assets and the underlying market regime.
Section 3 details the performance of our tactical and strategic allocations.
Section 4 discusses the transition from billionaires to trillionaires in the past 110 years in relation to stock market gains.

1. Performance of tactical ensemble and strategic allocation

Summary

For the week ending Friday, June 12, 2026:

• The weekly strategies tactical ensemble (WRE) gained 2.4% with equal allocation. Year-to-date: +19.9%
• The Price Action Lab strategic allocation (PALSA) gained 1.5%. Year-to-date: +19.1%.
• The SPY ETF rose 0.6%. Year-to-date: +9.1%

For the open positions and any new signals of WRE, see Section 3. We also include the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 32.6% year-to-date. The WRE (Lev) tactical allocation is up 27.2% year-to-date with 1.6x leverage to match the SPY ETF volatility.

2. Price action analysis, weekly market summary, and market forecast

We have identified changes in market dynamics this year, and we would like to share our findings with our subscribers.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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Weekly Market Report: From Billions to Trillions was originally published on Price Action Lab

The weekly reports include tactical ensemble and strategic allocation updates, a stock market forecast, and analysis of capital markets and price action. To access the full reports, you must subscribe to Premium Articles or Weekly Premium Articles.

Weekly Market Report

1. Performance of tactical ensemble and strategic allocation
2. Price action analysis, weekly market summary, and market forecast
3. Details of tactical ensemble and strategic allocation
4. Market dynamics discussion and conclusion

Section 2 covers trends in asset performance and an analysis of the drivers of the current market dynamic. We discuss current patterns in price action and review a market divergence from this week.
Section 3 details the performance of our tactical and strategic allocations.
Section 4 discusses profit-taking in the stock market and how traders and investors can manage its dynamics.

1. Performance of tactical ensemble and strategic allocation

For the week ending Friday, June 5, 2026:

• The weekly strategies tactical ensemble (WRE) fell 2.2% with equal allocation. Year-to-date: +17.1%
• The Price Action Lab strategic allocation (PALSA) lost 3.7%. Year-to-date: +17.4%.
• The SPY ETF dropped 2.5%. Year-to-date: +8.4%

For the open positions and any new signals of WRE, see Section 3. We also include the PALSA strategic allocation details and the performance when the volatility matches that of the SPY ETF, with 1.7x leverage, which is up 29.6% year-to-date. The WRE (Lev) tactical allocation is up 23.4% year-to-date with 1.6x leverage to match the SPY ETF volatility.

2. Price action analysis, weekly market summary, and market forecast

The S&P 500 index fell 2.6% for the week, after rising 19% due to a nine-week win streak. The drawdown in the past three trading days since the all-time closing high is -3%. Below is a histogram of the 3-day returns of the S&P 500 index total return (SPY ETF since inception).

The 3-day drop of 2.9% this week is less than minus two standard deviations from the mean of the available sample of 8,392 3-day rolling returns. As is also evident from the daily chart, the move carries no statistical significance. A more significant move this week was due to the following divergence.

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Disclaimer: These articles are provided for informational purposes only and should not be considered investment advice or actionable content. We do not guarantee the articles’ accuracy, completeness, fitness, or timeliness for any specific purpose. You should never treat the articles as financial advice. The author is not a registered financial advisor; thus, before subscribing, please read our Disclaimer and Terms and Conditions.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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Weekly Market Report: Profit Taking was originally published on Price Action Lab