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.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2xXu99sVJT6HoTiJHlIRiZT7eex-OT3ONUlcseH6gP95-h1f1OwNiZtzv9BfED3oLaeUrcoZShMKBCGCeNu6ra2pFr2jxqdQHhn1QDIuicTFjx7NWeQMFOQx2uQLcx27CZH8k7Isr7EosghT3sjom0Rlrv5Vy-ZhYSAo94UR1PN67XCFVe0oeI5-12A/w400-h290/Trend%20Model%20perf.png)
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.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhyR2TZv2GELWL4tNAZCRxQsiU4DEVocHgje69c3HjROriBT1QAIJ3pokYHkfkDJKApOUoKG8VXvmTrTjl-icdJeAfXhi8sjwg2U4VsX3CYVdsKLLPDcE4coS4ACnwoa_9-PAKe7JZ1SdfWZaqBkGl7Sm_mysUAwQ7H9tykg60G26rQnBr4_8fQkr69pA/w400-h291/Inner%20Trader.png)
The latest signals of each model are as follows:
- Ultimate market timing model: Sell equities*
- Trend Model signal: Bearish*
- Trading model: Neutral*
Update schedule: I generally update model readings on my site on weekends and tweet mid-week observations at @humblestudent. 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 dovish tone?There were few substantial surprises from last week's FOMC decision. However, the market interpreted Powell's statements as slightly dovish. As a consequence, Fed Funds futures began to discount a pause in late 2022 and easing by March 2023, which is a significant change from the expectations before the meeting announcement.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjzubaFDuqcfiZe0MUUoO271nlIXp83AnXqYMKXAO_Avek3LQ2wvK9aVujcHOPil6gADHjAK46_-79Zmzvl1yBKCbkKRActuCa_WPq_MCRurQcTbCZPotj6cAHYtdaMGjM20-kqLJQV0po3p42ZvFlKOwL9JphvB0prTEIlaN1YLIVDtKejbVrjtXSvYQ/w400-h379/Fed%20Funds%20probability.png)
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPRBBbEzETrwKrT7dolkQfq4apnkS3sOskDSJG8ruQj81XXsLsyRwg2U92VB0AMRlSTpiHkfKx7r1Sbj3fppSXxa-7AwojPGZY0vYy4fwRW0QjSmbOWT9fJ2QjDnEkQ3j58v4s84zOaVGnB3FkcPK6xjPMo-1vL5CtopsXue-IkWhnr_r0J7enGfSwUQ/w400-h198/Fed%20Funds%20expectations.png)
In what world does anyone think that massively fighting the Fed is a good idea?
The full post can be found here.