Meta Strategy Trading Portfolio – Probability Map Update.

A Shift in Warning Signals

FOMC brought a distinct shift to the market: Rather than the expected downside pivot this came in form of a boost to an already extended rally in equities.

To me this has major implications: The renewed vigor of the stock market rally despite a previous setup of waning momentum in the face of increasing warning signals dampens my negative short-term outlook. But the current rally is nearing 30% within 21 weeks without a 2% pullback, which is unsustainable over the long run.

On the other hand a collapse in volatility after FOMC and broad-based new highs have alleviated some of the most concerning alerts.

In sum this has moved my short-term assessment to neutral. I look to move back to the sideline to watch the tug of war between momentum and mean-reversion.