Weekly Models Update - Bear Market Trading🚨

Weekly Market Model Update for April 5th

Welcome to the weekly report! This report is targeted at investors that don’t have time to monitor the ebbs and flows of the market day to day and still want to beat the market and avoid bear markets🚀. Just 10 minutes a weekend is all it takes.

I focus on the MAJOR themes and the MAJOR trends of the markets in this report. All the models I present are back tested with results so you can see that they work🤔.

This post is long - so make sure you read it on the Substack App or Website so you get to see the bottom of it - Email can often cut the message short. Let’s get into the weekly models!

What Happened This Week

This week it was all about the Tariff Man in the Oval Office. The US induced itself with the equivalent of Economic Suicide this week with the introduction of some bizarrely calculated Tariffs on almost every country in the world. The stock market sold off producing one of the worst 2-Day moves in the history of the market into Friday after we saw some retaliation of Tariffs from China. This weekend we look to see what Europe will do and if we’ll see any real economic fallout in the form of major layoff announcements or rumors of struggling banks.

I’m sure you’ve already read a bunch about Tariffs, but the only thing I’ll say about them is this - they are much too high if the goal is reciprocal Tariffs (it is not) and if the goal is to balance the Trade Deficit (it looks like it is) then it does look like US markets are grossly overvalued and the market is doing a good job re-valuing them closer to what Vietnam, Europe or even China is worth.

Vietnam P/E Ratio = 13-14

Europe P/E Ratio = 17

China P/E Ratio = 10-11

US P/E Ratio = 25-26 (and this is after the -20% move in the QQQs already)

Please let that sink in. If we have leaders and voters obsessed with “equal” treatment using simple mental heuristics to understand complex things like global economies, then markets certainly will oblige and we can make a lot of money trading the re-valuation. I’m excited for the opportunities coming in the next 12 months!

Weekly Show and Tell

Each week I review a chart or model that I would normally keep behind the paywall, I hope you can make a couple bucks off of it! 🤑

I’ll show a model of breadth this weekend - it’s a complicated one that I use to assess just how far away most stocks are from an intermediate term moving average. Typically, when most stocks get this stretched from fair value, we do see a return upward towards a more reasonable valuation.

Breadth Model Flashing Bottom Signal