A Few Positive Signs Are Emerging

Last week, I discussed the broader macro perspective of the market and highlighted several technical and fundamental reasons why the equity market is likely facing a few months of headwinds. While I still believe that to be an accurate macro view, I also expect there will be tactical trading opportunities that emerge throughout this period.

Notably, our "signal" has historically shown a peculiar ability to provide early warnings of major market selloffs, such as the one we just experienced. There have only been a handful of such declines captured by the signal in its history, so I continue to categorize this behavior as “interesting, but not yet proven.”

Before any meaningful tactical trading can resume, there is typically a "clearing" event in the signal that needs to occur. Encouragingly, that clearing event appears to be underway. It often takes time to fully develop—sometimes several months—but once it does, conditions may again favor tactical trading strategies based on our AI model. Until that process is complete, I will continue to maintain a defensive posture in my portfolio composition.

Disclaimer: The information provided here is for educational and informational purposes only and should not be interpreted as financial advice. I am not a licensed financial advisor, and my portfolio strategies may not align with your financial goals or risk tolerance. All investments carry inherent risks, including the potential loss of principal. Historical data and model-based projections are not guarantees of future performance. Please consult with a licensed financial professional before making any investment decisions.