Trading Portfolio February 2

Meta Strategy Trading Portfolio – Probability Map Update.

Positive TOY Models

The S&P 500 ended January in the green, which adds the final piece to the January Trifecta, one of the major turn-of-the-year forecasting models.

Such a moderately positive start to the year has historically been followed by gains over the rest of the year the vast majority of the time.

This jibes with the positive data in my 2026 outlook and softens the expectation of a rocky period ahead of the midterms somewhat.

However, with a new FED chair at the reigns, I still anticipate a major drawdown in Q3 as the market has a tendency to quickly test his resolve.

Trading Portfolio January 26

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Wednesday –

Tariff TACO Reloaded

Once again irrational U.S. policy back-and-forth induces a wild rollercoaster ride across all risk assets simultaneously, while precious metals scream higher from extremely extended levels.

So far, the buy-the-dip trade looks to be alive and well, but timing the exact point of a potential top in Q2 is a futile endeavour.

I prefer to lighten exposure ahead of time to be able to react flexibly to coming developments.

Trading Portfolio January 19

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Tuesday –

Rotation Continues

In contrast to many previous cases over the last years, the leadership rotation towards the broad market is showing some legs with the Russell 2000 outperforming the S&P 500 for eleven consecutive days.

The current bull market continues to broaden out, which improves market breadth – a favorable sign for future returns.

While a typical midterm-January, range-bound market may well continue, widespread momentum is returning underneath the surface after a consolidation phase.

Trading Portfolio January 12

Meta Strategy Trading Portfolio – Probability Map Update.

Rotation Broadens Bull Market

International Stocks are off to a fulminant start to the year leading out of the gate, which has caused our Relative Strength Strategy to rotate from U.S. tech stocks to international equities.

Such a rotation of strength from a few mega cap tech names into a wide swath of sectors and regions is significant as the current bull market is broadening out.

Widespread momentum is returning after a consolidation phase in November and December.

I am starting to look closely at turn-of-the-year models, as a range of time periods contain significant predictive value – they are not infallible, but show skewed probabilities for future returns depending on their performance.

The initial data-points of the January Trifecta support my positive 2026 Outlook.

Trading Portfolio January 5

Meta Strategy Trading Portfolio – Probability Map Update.

Building the Big Picture Outlook for 2026

Part IV) Market Liquidity

Financial conditions and market studies confirm a picture of ample liquidity and accommodative policy, in case trouble appears, over the coming months.

Not only has the FED re-started its interest-rate cutting cycle, but has begun supplying additional liquidity via a new “QE, but not-QE” easing program that buys U.S. treasuries.

A cornerstone data point for my long-term outlook is the S&P forward return chart after the first rate cut: Cuts tend to be supportive for the stock market over the next two years, if the cutting cycle wasn’t triggered by a recession.

Markets run on liquidity and only when the fuel runs out will gravity finally take over.

This report synthesizes my Outlook 2026 series into a concise roadmap.

Trading Portfolio December 29

Meta Strategy Trading Portfolio – Probability Map Update.

Building the Big Picture Outlook for 2026

Part III) Price Momentum

The stock market’s current strong momentum regime, initiated and reconfirmed by breadth thrusts, has been a cornerstone of my research for several months.

We are in a mature, well-established momentum environment by now, which doesn’t imply the trend is about to end – quite the contrary.

Chances are good that the S&P closes green for the 8th consecutive month, which would coincide with the 7th monthly closing all-time high in a row.

Quantitative studies based on these momentum data points show that strong momentum begets more momentum: over the medium to long term the outlook is decidedly bullish.

Strong monthly, as well as yearly, momentum points to a lasting uptrend. A recent, typical consolidation period ended with a new impulse of market breadth, which propelled the S&P 500 to a new all-time high last week and confirmed the current momentum regime.

Momentum is a fright train that will most likely determine the market’s primary direction for months to come.

Trading Portfolio December 22

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Tuesday –

Building the Big Picture Outlook for 2026

Part II) Historical Patterns

I consider two specific historical patterns as especially relevant for today’s stock market: a) a slingshot, V-shaped recovery from a sharp 20% correction and b) the tendency that long secular trends often change direction via the bursting of a huge bubble.

The 2025 slingshot recovery from a deep correction, ending in a double-digit positive year, points to a lasting uptrend.

Similar past continuation periods lasted 1-2 years from new, post-correction all-time highs.

Should the idea that we are in the process of blowing up a market bubble that marks the end of a secular bull market hold true, we should expect increasing volatility to disturb the calm rally of the past months.

Often multiple, sharp 10%+ corrections happen before the ultimate top, which makes 2026 look to be merely the beginning of a drawn-out bubble top to me – a year is simply not enough time for a broad topping process.

Trading Portfolio December 15

Meta Strategy Trading Portfolio – Probability Map Update.

– Tuesday Positioning Update –

Building the Big Picture Outlook for 2026 (part I)

A range of different analytical perspectives for next year’s outlook are based on (I) Market Cycles, (II) Historical Patterns, and (III) Price Momentum influenced by fundamentals and the coming turn-of-the-year (TOY) price dynamic, all of which I plan to address over the coming weeks.

I) Cycle Based Outlook
Secular and cyclical bull markets are in positive alignment.

A true bubble melt-up could run quite a bit longer by historical standards and even the current cyclical bull market is still well below the average duration.

However, the coming midterm election year tends to be notoriously volatile and difficult: The average drawdown during the year is -17,5%.

This jibes with the cyclical pattern in which Q3 of bull-market year four has a distinct tendency for weakness within a strong bull market.

While 2026 has a good chance to end positive – maybe even by double digits – a deep intra-year drawdown around 20% should definitely be on our bingo card: In previous cycles the time of maximum weakness was in the third quarter with a peak after Q1.

Trading Portfolio December 8

Meta Strategy Trading Portfolio – Probability Map Update.

Grind Up

At a snail’s pace the S&P 500 keeps grinding up day after day and has ended last week just a hair’s breadth away from a new all-time high.

This is typical when stocks digest a shocking thrust from an environment of deep insecurity.

There is simply nothing is happening as everyone waits for a new market-moving event.

Underneath the surface this alone generates mechanical flows that are sufficient to levitate the index slowly higher.

This can keep the party going into January, until the new year may introduce increased volatility in both directions.

Trading Portfolio December 1

Meta Strategy Trading Portfolio – Probability Map Update.

Back On Track

In a last minute save, the S&P 500 finished November as the 7th green month in a row.

From a 6% pullback the index shot straight up during Thanksgiving week and recovered key technical resistance levels.

This reconfirms the immensely strong momentum regime that has been building since this year’s April lows and sets up a breadth thrust recovery.

The current impulse has a high likelihood to last into the new year riding on end-of-year liquidity tailwinds.

Trading Portfolio November 24

Meta Strategy Trading Portfolio – Probability Map Update.

Insecurity

The erratic price action over the last weeks has thrown many traders for a loop.

If you share that heightened feeling of uncertainty and insecurity, you are not alone.

In transitory phases like this it is best to take a step back and recalibrate to what is normal market behavior.

The current stock market scenario for the second half of 2025 remains right on track so far and follows a long-term pattern that is uncommonly specific and has been reliable across history.

Trading Portfolio November 17

Meta Strategy Trading Portfolio – Probability Map Update.

Buy the Rumor – Sell the News

In a classic pattern stocks rallied in anticipation of the reopening of the U.S. government – only to begin falling as soon as the deal was signed.

This is common around government shutdowns, because the reopening is relatively easy to anticipate.

In most cases eliminating the liquidity bottleneck caused by a dormant government takes some time to take effect, but then becomes a steady, long-term tailwind.

Within the extraordinary momentum environment of the last seven months two main short-term factors have caught my eye.

They support the idea that the market may be moving from a smooth up-cycle of returning confidence to a period of increased volatility and violent pullbacks, which is typical behavior as markets get closer to a broad top.

Trading Portfolio November 10

Meta Strategy Trading Portfolio – Probability Map Update.

Liquidity Air Pocket

Sooner than anticipated stocks hit a liquidity bottleneck and fell through an air pocket created by high expectations of a strong year end, which were likely front-run to some degree in late summer.

This has led to the largest pullback since April, breaking the pattern of an uncommonly low vol, smooth uptrend and indicating a potential return to stronger market fluctuations.

Confidence is waning and under the hood the market continues to display an extreme bifurcation between stocks making new highs and new lows simultaneously.

A closer look at the history of such signals shows that they are now a significant cluster of warning signals.

As these tend to flash several months ahead of market tops, they could be spelling bigger trouble to come in Q1 of 2026.

Trading Portfolio November 3

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Wednesday –

Momentum VS Ominous Breadth

Powerful upside momentum carried the S&P to our initial upside target around 6900 before it consolidated in a tight range for the rest of the week.

Combined with a strong seasonal tailwind this bodes well for the coming 2-3 months, as well as over the long term.

However, a look under the hood of the market during the last days reveals an unusual bifurcation between stocks making new highs and new lows simultaneously.

A closer look at the history of such signals shows that they can be a significant warning, but tend to be several months early.

For our trading positions there is no need to overthink it – simply let them run!

Trading Portfolio October 27

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Tuesday –

Consolidation Box Breakout

Right on cue to start the best stock season of the year, the S&P 500 closed at a new all-time high.

This is the line in the sand that signifies that the October pullback has finished and stocks are now breaking new ground.

The majority of the data over the last weeks lay out a convincing base case that extraordinarily strong momentum is taking over once more.

I recap how I built a large long position over the course of the recent pullback, as well as address potential problems and invalidation areas for this thesis.

Trading Portfolio October 20

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Tuesday –

Violent Chop

October is living up to its name as one of the most volatile months of the year as stocks chop around in a wide, volatile range that is driven by policy news.

This is quite the change of character from the previous calm months.

Buyers are still validly trying to step in like they have been conditioned to, but an instant recovery to new all-time highs is missing as yet.

Over the very short term this puts me into a wait-and-see mode with no edge.

Over the medium- to long term, however, momentum studies continue to clearly show that this pullback is a high-probability buying opportunity.

They unanimously point to Q4 strength with as close to a perfect record as market studies can have.

Trading Portfolio October 13

Meta Strategy Trading Portfolio – Probability Map Update.

Pullback Begins with a Bang

Only yesterday everyone was asking themselves: Is seasonality a total failure? Will no red flag matter and stocks just continue to grind up like it’s 2017?

And just like that the good, old tariff narrative returns and sends risk-assets into a sudden tailspin, with massive liquidations in Cryptoland and the most speculative areas of the stock market.

The actual abnormality was not Friday’s mini-crash, but the volatility-compressed rally of the past 6 months.

Momentum studies over the past months clearly show that this pullback is an excellent buying opportunity – they unanimously point to Q4 strength with as close to a perfect record as market studies can have.

Trading Portfolio October 6

Meta Strategy Trading Portfolio – Probability Map Update.

Vibes of 2017 (revised)

The relentless, slow-motion grind-up in the S&P 500 awakens memories of the historic volatility compression regime of 2017.

The S&P 500 went straight up without a pullback larger than 3% to gain nearly 40%.

Market strength in the face of seasonal weakness increases the probability that we are transitioning straight into a melt-up rally.

Upside volatility is more pronounced currently than in 2017 and a new historic outlier is the smooth transition from a recovery pop into an increasingly more sustainable, shallower rally trajectory after a V-shaped correction.

Also, the current volatility dynamic is already beginning to change: Vol-up / Market-up is becoming a persistent feature of the current market.

This indicates rising fragility with an increased probability of higher bi-directional volatility to come.

For Q4 of 2025 momentum studies still point to strength with as close to a perfect record as market studies can have.

Trading Portfolio September 29

Meta Strategy Trading Portfolio – Probability Map Update.

Momentum VS Mean-Reversion

In a make-or-break week for bears an accumulation of red flags battled extraordinarily strong momentum with moderate success: Stocks went through a mild decline last week, but saw no major deterioration.

The time has come for me to buy aggressively over the coming weeks, because with weakness under control year-end melt-up probabilities are rising.

However, mean-reversion within a runaway momentum regime has a significant probability to continue playing out in October, which could lead to good buying opportunities.

As soon as negative flows revert, momentum is likely to pop back up with a vengeance.

Trading Portfolio September 22

Meta Strategy Trading Portfolio – Probability Map Update.

Make or Break Week for Bears

This coming week faces the highest probability for a bearish breakdown in the second half of 2025.

An accumulation of red flags battles with runaway momentum:

* Peak seasonal weakness
* Volatility up / Market up dynamic
* Record quarterly OpEx
* Extremely overbought conditions
* Momentum / RSI divergences
* JPM strike SPX 6505 magnet

This setup marks this week as a last stance for frustrated bears: If weakness fails to show up, year-end melt-up probabilities are rapidly rising.

Trading Portfolio September 15

Meta Strategy Trading Portfolio – Probability Map Update.

– Wednesday Update: OpEx and Vixperation window of non strength (see end of “current drivers” section) –

Status Quo

The momentum train rolls on unabatedly as the S&P 500 reached another milestone at 6600 on Friday.

Medium- to long term strength:
We are in a volatility compression regime that is reminiscent of 2017.

In general, such regimes tend to be very sticky and my base case is that we will remain in a solidly bullish trend over the long term.

Short-term pullback:
The consensus is shifting from deep skepticism of this rally to hyper-bullish sentiment.

This may be a bit premature as the worst seasonal period is only starting right now (supported by a number of additional red flags).

Complacency may easily lead to a perfectly normal 4-9% down-swing within a momentum rally, but timing such a pullback is difficult – we will know it when we see it.

Trading Portfolio September 8

Meta Strategy Trading Portfolio – Probability Map Update.

Chop Fest

Volatility is picking up in the beginning of September, but, unfortunately, it is multi-directional and choppy.

It is an environment where the vast majority of traders bleed money and, most of the time, it is much healthier to wait patiently for a decisive move out of the chop zone.

Being focussed on a swing-trading time-frame of 4-8 weeks, it becomes increasingly hard to resist FOMO: It is amazing how often giving in to such an impulse finally marks the top as human behavior is incredibly synchronous.

Once everyone capitulates into buying, there is no one left to sustain a rally.

The failed breakout to a new ATH following bad job numbers is a perfect example.

Trading Portfolio September 1

Meta Strategy Trading Portfolio – Probability Map Update.

–Tuesday Positioning Update –

Wake Me Up When September Comes

The month has not even started and it’s already promising to be an interesting one.

During the mild decline at the end of last week, the SPX/VVIX 5-day correlation flashed a very strong alert.

This may foreshadow a distinct change in the tone of the market over the weeks to come.

At the same time, gold started a breakout attempt, while crypto is breaking down from its recent highs – the correlated Nasdaq failed to make new all-time high and is the first index to watch for a potential lower low.

All this is happening in the months of peak seasonal weakness.

Trading Portfolio August 25

Meta Strategy Trading Portfolio – Probability Map Update.

Windows of Non-strength

Framed well this concept can form a useful basis in our search to find an edge, despite subdued effects in the current, overwhelming momentum environment.

Essential is that we think about financial markets as a probabilistic environment defined by an ever-shifting distribution of possible outcomes.

Our job is to isolate the scenarios that have the highest probability to play out.

Due to the self-reinforcing feedback-loops prevalent in the stock market, opposing scenarios can often have similar expected value.

In Jerome Powell’s annual Jackson Hole speech, stocks faced an If-Then setup: A hawkish Fed would likely have led to a short-lived, fast pullback.

A dovish Powell, on the other hand, re-ignites the positive, pre-OpEx options market flow as event volatility dissipates.

This is likely to be a tailwind for assets into the end of the month.

However, a volatile September remains a major scenario, therefore I’m happy to cautiously keep positioning very light, remain patient, and simply let my investment portfolios do their thing in the meantime.

Trading Portfolio August 18

Meta Strategy Trading Portfolio – Probability Map Update.

Vibes of 2017

The current slow-motion grind up in the S&P 500 awakens memories of a 2017-style volatility compression.

While such comparisons are interesting to set outlier expectations, they are to be taken with a grain of salt.

I anticipate a volatility compression regime, in-line with similar post-V-bottom correction periods, as the most likely path forward.

It is, however, likely to be more moderate than the most extreme year in history: I expect a Vix between 10-15 with occasional spikes above whenever the S&P pulls back 4-9%.

And remember, vol compression often ends with a bang!

August OpEx
Fast-forward to today, even if we may be at the beginning of an extended low-volatility regime, the rare setup of stocks rallying into a period with Vixperation occurring after OpEx has an elevated probability to see a turnaround: Falling stocks can lead to a temporary expansion of volatility.

Trading Portfolio August 11

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Wednesday –

Powerful Momentum

The S&P 500 has begun its anticipated consolidation phase by forming a clear range, which just fulfills my minimum criteria of a multi-week correction in time and price.

Currently a tug-of-war sees powerful momentum battling an array of negative short-term indications beneath the surface.

Chances are just about even which will win over the coming weeks, but are overwhelmingly in favor of momentum gaining the upper hand over the next months.

It is a fright train that will most likely determine the market’s primary direction for months to come.

Trading Portfolio August 4

Meta Strategy Trading Portfolio – Probability Map Update.

Probability Map Deep Dive

From a short-term perspective a confluence of data points to a rather good opportunity to short the S&P 500 over the next weeks.

Why then have I temporarily downgraded the current opportunity from green to yellow this week?

The answer lies in the simple, powerful concept that probabilistic forecasts for different time horizons all interact with each other.

Only when all outlooks are aligned is the opportunity truly excellent.

I dive deep into our current Probability Map to highlight the concepts of multi-time-frame forecasting and data-driven edge stacking.

Trading Portfolio July 28

Meta Strategy Trading Portfolio – Probability Map Update.

Hitting the Ceiling

Stocks currently encounter strong resistance in the form of an ultra-long-term bull-market channel since 2007.

Momentum looks unstoppable, but, let’s face it, the current rally’s ascent is unsustainable at a 32% gain in four months.

I would be surprised, if the stretched, increasingly speculative rally in equities didn’t show some kind of reaction around this long-term ceiling, even if it’s only temporary.

I construct a beautifully symmetrical, hypothetical scenario for the coming months – based on similar historical patterns.

Trading Portfolio July 21

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Thursday –

Summer Doldrums

The S&P 500 was pinned in a tight range into July OpEx, which is slowly widening as consecutive failures to break out frustrate both bulls and bears.

However the current consolidation range is still too narrow to fit historical case studies – it is likely to broaden out over the coming weeks.

The OpEx pin caused by high levels of positive gamma has been pulled as a large chunk of options’ gamma expired on Friday, which now opens up the possibility for a larger directional move.

Because the current edge for shorting the stock market has a very thin margin of error, the best course of action is to simply wait until a pullback within the most favorable parameters actually happens and offers an exceptionally good reward-to-risk opportunity on the long side.

Trading Portfolio July 14

Meta Strategy Trading Portfolio – Probability Map Update.

Consolidation Season

The model trading portfolio switches to summer mode: Fully hedged, I await a consolidation period that is inevitable to arrive sooner or later.

The rate of ascent of the rally since the April low is set to reset, because a gain of more than 25% per quarter is not sustainable.

However, it is difficult to time the coming pullback within a very positive, long-term momentum environment.

The best one can do is narrow down the most likely pullback range and pinpoint high probability time windows of weakness.

It helps to study historical parallels closely: What happened going forward after deep V-bottoms when new ATHs were reached and after 25%+ 3-month rallies?

Trading Portfolio July 7

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Thursday –

Re-calibrating my stock-market outlook for the second half of 2025.

My favored scenario takes the tumultuous first half of the year into account to narrow down on the most probable path for equities for the remainder of 2025 and into 2026.

The defining setup for my H2 outlook is the recently-completed, V-shaped recovery following a deep correction down to the edge of bear-market territory.

From a panic-crash stocks rallied in one of he fastest recoveries in market history triggering positive breadth thrust signals and finally entering a strong momentum environment.

A fresh Quiet Bull Market is very positive overall and points to positive one-year forward returns.

The handful of historical parallels feature striking similarities: All of them continued in a multi-year, low-volatility uptrend, after initially re-calibrating their steep trajectory to a shallower, sustainable rally via a lengthy sideways-consolidation.

Trading Portfolio June 30

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Wednesday –

Confirmed V-Bottom

With a fresh all-time high at Friday’s weekly SPX close, a rare V-bottom correction has been confirmed.

Increasingly positive market studies opened up a green opportunity for the model trading portfolio in June.

An additional major development is the confirmation of a fresh Quiet Bull Market regime by my systematic Meta Strategy model, which will finally trigger this Monday.

From a fundamental perspective a number of factors speak to a continuation of a fiscal and monetary impulse – a tailwind that is not fully priced in.

Trading Portfolio June 23

Meta Strategy Trading Portfolio – Probability Map Update.

OpEx Seasonality

In the context of positive influences on equities from momentum, market breadth, and breadth thrusts supported by sentiment, positioning, and fundamentals pivoting from pessimism to a positive note, markets are facing a minor window of potential weakness after a major monthly options’ expiration last Friday.

In the past, such major expirations have repeatedly marked important turning points for stocks.

However, I am more inclined to give seasonal tendencies the benefit of the doubt and expect temporary weakness driven by geopolitical events in the first half of this week, before the second strongest two-week period of the year begins.

Trading Portfolio June 16

Meta Strategy Trading Portfolio – Probability Map Update.

Just as the majority of quantitative studies based on similar historical market conditions flash green across the board, serious geopolitical upheaval enters the stage. It’s never easy, is it?

A good rule of thumb regarding such events is to ask: Will it actually impact the economy?

The initial, mild decline on Friday was perfectly in line with historic reactions to comparable geopolitical events.

It may take a few days to work through the heightened volatility, but so far the S&P’s breakout towards new all-time highs holds.

Until that changes, headlines and events are just noise.

Trading Portfolio June 9

Meta Strategy Trading Portfolio – Probability Map Update.

Successful Breakout

So far so good, the S&P 500 broke above a short-term bull flag last Tuesday and triggered a long entry.

The technical picture now presents an overwhelmingly bullish momentum environment that is still met with widespread disbelief.

Objectively, stocks trade in an uptrend across all time frames.

Quantitative market studies, seasonality and resilient fundamentals all show significant strength and a return to a positive market regime.

A three-week consolidation has helped to normalize overbought conditions, but simultaneously began to cause divergences across momentum indicators.

Without new negative evidence of a stalling rally the next targets are at new all-time highs with the next seasonal window of potential weakness around monthly OpEx.

Trading Portfolio June 2

Meta Strategy Trading Portfolio – Probability Map Update.

– Wednesday Positioning Update –

S&P Hits Snooze

In a well-deserved pause stocks hit the snooze button to consolidate in a loose, bullish flag just above the 200-day moving average.

Stocks are holding in the December to February price range above a long-term trendline, without closing large gaps nor testing major support below.

This is a sign of significant strength that is supported by the majority of current market studies.

While my outlook shifts further towards a positive resolution across all time horizons, two ingredients are still missing to confirm this renewed bullish picture.

Trading Portfolio May 26

Meta Strategy Trading Portfolio – Probability Map Update.

Déjà-Vu, All Over Again?

Just as rising bond yields, due to the U.S. administration’s pivot to renewed fiscal expansion, became the center of attention, destructive tariff policies are suddenly back on the agenda causing a stock market pullback.

However, equities are much more inclined to call the president’s bluff and ignore his blustering regarding tariffs this time around, even if markets are still vulnerable to aftershocks following a prolonged high-volatility regime.

While a 2016-type double dip remains possible, my favored scenario is a solid, confirmed higher low marking the end of a significant pullback.

After being out of synch for most of 2025, probability assessments across all time frames are beginning to align tentatively as most data-driven signals are shifting positive.

Trading Portfolio May 19

Meta Strategy Trading Portfolio – Probability Map Update.

One-Eighty

Destructive tariff policies are being rolled back to more tolerable levels, while the Trump administration looks to be pivoting from austerity to broad fiscal stimulus.

This policy flip-flop led to one of the fastest, large-scale recoveries for stocks in history.

Multiple rapid changes that lean towards highly unexpected, unlikely policy actions lead to a difficult trading environment whipsawing trades in both directions.

Data-based signals remain mixed and I see no trading edge currently, until a potential 5%+ pullback aligns several conditions that currently oppose each other.

Trading Portfolio May 12

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Thursday –

In Limbo

Back at the scene of the crime, stocks pause exactly where they began their April tariff crash as they have reached a key inflection point.

There are only so many repetitions of “great deal just ahead” the market will swallow for a sustained advance and now the fuel of that narrative is running out.

Because fundamental data is deteriorating very slowly with recession odds roughly averaging a 50/50 bet across many analysts, technical patterns currently define my outlook. Two major conditions stand out:

* A confirmed downtrend is more likely to continue than reverse straight away.
* A panic crash followed by a 50-62% partial recovery is a very distinct pattern that repeats over and over throughout market history.

Overall, this leads me to define the current set of opportunities as weak and risky, because probabilistic outlooks are not aligned over multiple time frames:

My short-term outlook is negative, while the medium- to long-term perspective is mutedly positive.

Trading Portfolio May 5

Meta Strategy Trading Portfolio – Probability Map Update.

A Mind-Boggling Rally

In the beginning of April panic gripped financial markets as “the end of American exceptionalism” via the destruction of globalized free trade became the #1 narrative causing international investors to flee all U.S. assets in droves.

Extremes in pessimistic sentiment and positioning heralded near-term sellers exhaustion and a stock-market recovery, which has morphed into a monthly reversal of historic proportions by now.

Recent data based on market breadth and breadth thrusts does strongly support the view that the worst may already be behind us.

However, the slow-moving, real economic damage caused by destructive policy cannot be ignored.

Should the U.S. economy fall into recession, it could easily override those signals of strength.

A large rally off the panic bottom by itself is by no means an indication that new highs are imminent and we should expect at least a significant drop to a higher low as buyers are likely to become exhausted soon.

Trading Portfolio April 28

Meta Strategy Trading Portfolio – Probability Map Update.

More Mixed Signals

Last week began with a synchronized sell-off in U.S. stocks, bonds and the U.S. Dollar as international money continued its flight home.

This is an exceedingly dangerous combination that tends to be followed by 3-6 months of volatile market turmoil.

On the other side of the ledger, the Trump Put caused a strong bid for equities, which triggered two strongly positive breadth thrust signals on Thursday – this reliably foreshadows excellent, smooth returns a year later.

So, what are we to believe?

While positive breadth points to a solid lower boundary for the current correction, which renders significantly lower lows a less probable scenario, several conditions still speak against a straight V-bottom.

Trading Portfolio April 21

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Wednesday –

More Volatility Incoming

Uncertainty continues to reign with the near-term course for risk assets hanging by the thread of a tweet.

A high volatility forecast is not inherently directional, but last week gave clear pointers towards the more negative of my three primary scenarios for stock market returns over the coming months.

Both the Trump Put, as well as the FED Put, are quite clearly defined now and their combination continues to signal risk-off for stocks – there is no immediate stimulus packet ready to come to the rescue.

With a a V-shaped recovery scenario off the table, probabilities for a volatile, months-long bottoming process are highest.

However, the likelihood for a recessionary bear market is shooting up from a low base level, as a significant slowdown in global trade, which weakens economic activity, is clearly beginning to show up.

Trading Portfolio April 14

Meta Strategy Trading Portfolio – Probability Map Update.

The Trump Put

We now know where the pain point lies at which the U.S. president is likely to fold his cards and come in with significant market support.

This relieves some of the current uncertainty, which resulted in a massive spike higher across all risk-assets last week.

Continued negative reactions from the bond market indicate a distrust-driven liquidity drain away from U.S. assets that can continue for many months – we are not out of the woods yet.

An adjustment period with a significant slowdown in economic activity often leads to an extended high-volatility regime and an undercut of the crash low several weeks later is most consistent with a volatility shock, as the one we have just been through.

I currently see most commonalities with the 1998 and 2011 market declines.

Trading Portfolio April 7

Meta Strategy Trading Portfolio – Probability Map Update.

Risk-off Time

The Trade Wars have begun.

The U.S. tariff announcement last Wednesday exceeded the markets’ worst expectations by far and the world has become truly unpredictable.

This development has the potential to crash the economy, but, on the other hand, negotiations could quickly roll back the worst case scenario – there is no way to know.

While a technical short-term bounce is likely, I’m reducing risk across the board and plan to remain in patient capital-protection mode until the situation becomes clearer.

Trading Portfolio March 31

Meta Strategy Trading Portfolio – Probability Map Update.

Back in the Doldrums

After initial green shoots appeared on our screens last week, the S&P 500 now looks to be heading back down to retest its correction low.

Several key market studies were flagging 2-4 weeks of difficult, volatile market conditions (with many pointing to a high probability for a recovery 2-3 months out) and that is where we are stuck now.

Pro-recovery data beats arguments for a much deeper decline for the moment.

A potential “sell the rumor, buy the news” setup around tariffs is consistent with several current indications.

However, the stock market remains difficult and vulnerable to further declines, should extreme uncertainty continue to persist and trade wars escalate.

Trading Portfolio March 24

Meta Strategy Trading Portfolio – Probability Map Update.

Breadth Burst and Volatility Crush

Bulls and bears are locked in a struggle near the long-term uptrend, which generates a range of signals and market studies that are often contradictory.

It can go either way from here.

However, as bear markets are rare events, history points to a 75% probability that we see a resumption of the bull market with limited further downside and only a 25% chance that the S&P 500 falls by more than 20% from its February high.

As stocks attempted to form a bottom last week, two specific signals occurred that I think are highly relevant to suss out the most likely short- to medium-term path for stocks.

I go into an in-depth discussion of VIX Futures Term Structure Inversions.

Trading Portfolio March 17

Meta Strategy Trading Portfolio – Probability Map Update.

Volatility Is Here To Stay

The S&P 500 has breached correction territory with a number of red flags accumulating against it and my outlook has turned more cautious.

While the chances for a successful short-term bounce are growing with each attempt, several warning signals make a prolonged correction with lower lows increasingly likely – at the very least I expect a highly volatile environment to last for several weeks even in case of a swift recovery.

As is often the case, an epic battle between bulls and bears unfolds near the long-term uptrend with a range of signals and market studies that can be highly contradictory.

My focus is on preserving capital and peace of mind while the dust settles.

Trading Portfolio March 10

Meta Strategy Trading Portfolio – Probability Map Update.

Bottoming Attempt?

The S&P 500 has fallen by 8% without a single multi-day bounce – two major attempts were quickly sold and Friday marks the third try.

Will it be more successful?

In nearly every instance the S&P 500 retraces 50-62% of a straight drop from an all-time high, which could be starting now, but also from an even lower point.

After that rally, I am looking for a higher low combined with a substantially lower Vix high to indicate the beginning of a bull-market rally into the summer.

This may very well occur over the next weeks as spring seasonality is about to turn positive and U.S. equities are likely to follow international strength.

As scary as deep pullbacks are, they are a major opportunity the majority of the time when looking at the bigger picture.

Trading Portfolio March 3

Meta Strategy Trading Portfolio – Probability Map Update.

Tuesday Positioning Update & Trade setup cancelled

Growth Scare triggers Liquidity Cascade

The first bout of truly relentless selling since last August has finally come to pass.

Key for my trading approach is to protect capital in such situations, because the real, sustainable opportunity comes after the dust has settled.

As a growth scare is beginning to take hold and sentiment collapses during outright policy carnage of the new U.S. administration, we are in the midst of a fog of maximum uncertainty.

It is very well possible that we will see another substantial leg down after the bounce that began on Friday.

However, equally probable is that the current consolidation box continues to hold and stocks move sideways into March before another attempt to break out to the upside.

Over the medium- to long term, probabilities are in favor of U.S. equities following the successful breakout in European stocks.

Trading Portfolio February 24

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Tuesday –

Back into the Box

Last week’s attempt to break out to new all-time highs has failed as the S&P 500 moved back into its consolidation zone.

U.S. Stocks have now gone nowhere for 3 1/2 months and I consider them rangebound until this box breaks

It is essential to remain patient and protect capital.

While we remain in a seasonal weak spot into March, a number of supportive factors continue to point to an upside resolution of the messy pullback: The current combination of bearish sentiment and moderate positioning with broad strength is quite powerful and has the potential to propel stocks higher into the summer.

Probabilities are in favor of U.S. equities following the successful breakout in European stocks eventually.

Trading Portfolio February 17

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Thursday/Friday –

Breakout against Disbelief

While bearish sentiment deteriorated to a rare pessimistic extreme, the major U.S. stock indices are attempting to brake out of a months-long sideways consolidation.

This combination of bearish sentiment and moderate positioning with broad strength is very powerful and has the potential to propel stocks much higher into the summer.

The big question is: Will U.S. equities follow the successful breakout in European stocks?

Trading Portfolio February 10

Meta Strategy Trading Portfolio – Probability Map Update.

Trade Skirmishes

Last week was an exact carbon copy of the week before and, for as long as equities continue their sideways consolidation, I will remain in cash.

Knowing when to stay on the sideline and patiently wait for the next opportunity is a superpower in trading.

The way to make money in this environment is to fully embrace a distinct weekly pattern and count on it repeating.

Unfortunately, too many things could go wrong, in my opinion: The pattern is inherently unreliable.

Trading Portfolio February 3

Meta Strategy Trading Portfolio – Probability Map Update.

It’s an Expectations Game

Why is my base case for 2025 to anticipate an environment characterized by mean reversion, likely resulting in an overall flattish year with deep corrective periods?

The most convincing data points contrasting 2025 with 2024, as well as 2023, are much higher fundamental expectations for economic growth at the beginning of the year.

For stocks to perform as well as they did over the last two years, a similar upside surprise in growth and earnings would be necessary.

Using three charts I illustrate why that is unlikely and show the historical effect of a change in in the relationship of expectations and real economic results on stock prices.

Extremely good stock market performance invariably results from things turning out to be much better than expected, but for 2025 growth expectations have fully adjusted to the actual outcomes of the last years.

Trading Portfolio January 27

Meta Strategy Trading Portfolio – Probability Map Update.

– Monday Morning Update –

Strength Returns

As the initial policy fog lifts, stocks react with a strong rally.

In fact, at first glance it seems that we may have flipped right back to the market environment of the second half of 2024: Contained pullbacks followed by overwhelming strength as the S&P runs from all-time high to all-time high.

While this may well be the case, I remain skeptical until further confirmation.

The unpredictable nature of the current news flow may just as easily lead to sharp drops in equities as induce strong rallies.

I have now locked in all remaining profits from a great run since last August and am quite happy to adopt a careful wait-and-see stance over the next weeks.

Trading Portfolio January 20

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Wednesday –

Messy Consolidation

An additional pattern highlighting the distinct change to the tone of the market since mid-December is the entirety of the ongoing consolidation: it is messy, volatile, and directionless. Gone are the V-bottom pullbacks of 2024.

Going into the US presidential inauguration we are facing a wall of fog that renders most forecasts virtually useless.

Markets are going to stay volatile, as we are very likely to see multiple strong reactions to upcoming policy announcements over the next weeks.

An expectation of a difficult, low-edge trading environment helps us to protect capital.

And beneath the fog ahead there are some solid foundations that we can anchor to.

Trading Portfolio January 13

Meta Strategy Trading Portfolio – Probability Map Update.

Flourishing Fundamentals – Skittish Stocks

We continue to move from a great environment with aligned forecasts across different time horizons to a much weaker opportunity set.

The year is already shaping up to be a more challenging trading environment than the last, as worrying technical data is sending increasing warning signals.

In contrast, my systematic market model has made a major, positive shift as its leading economic indicators have jumped to a green light this month with several areas of economic concern improving simultaneously.

This is one of several contradictory signals defining the current market, which makes data-driven positioning much more difficult – the edge is declining.

However, if I where to fall back on one basic rule, it is this one: When stocks struggle while the economy improves, it is rarely a cause for lasting concern.

Trading Portfolio January 6

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Monday –

The Q1 Correction Riddle

Uncertainty causes volatility, but volatility leads to opportunity.

As investors reflect on the beginning of a new year, confidence and exuberance wane, while uncertainty about major policy decisions of a new US president over the next months rises to the forefront.

The futures cone of probable paths for stocks has widened leading to an increasingly low-edge environment – the corresponding illustration in this report can be used as an aid to visualize the current opportunity set probabilistically.

Great opportunities arise when one particular primary scenario can be assigned a much larger probability with higher confidence than others.

Often that is simply not the case and these are the times when it is best to concentrate on protecting capital.

My best bet, albeit with decreasing conviction, continues to be on the long side: Several paths from a variety of possible scenarios cluster around a short-term resolution to the upside.

However, the first quarter of 2025 is fraught with danger and a serious pullback between now and April is very likely – many astute analysts even expect a correction of 10-20%.

Trading Portfolio December 16

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Thursday –

Almost There…

Due to a densely packed period filled with holidays, there are just a few trading days left in 2024.

These last days into the new year tend to be quiet and reflective, which is usually mirrored in financial markets.

The famous Santa Claus Rally is about to start soon directly followed by the January Effect.

The period from December 17th to January 4th has a significant seasonal edge.

But not to get ahead ourselves, right before the positive year-end period stocks often see some weakness, which is ascribed to investors’ tax loss harvesting before they go on holiday.

Trading Portfolio December 9

Meta Strategy Trading Portfolio – Probability Map Update.

Time for a Pause?

With the S&P 500 relentlessly grinding up day after day, the question on every trader’s mind is: How long can this continue?

However, a quiet holiday period is likely, because investors are not just going to stop taking time off. That alone will put probabilities squarely in favor of those Vanna and Charm flows to do most of the gentle lifting over Christmas.

That leaves an open question: Just when are we going to see a consequential sell-off larger than 5%?

Polling the wisdom of an informed crowd yields a nuanced, probabilistic outlook.

Trading Portfolio December 2

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Thursday –

Holiday Trading

In typical fashion, the stock market drifted higher during Thanksgiving week.

As this is only the first of several such low-volume holiday periods between now and January, let’s look into the mechanics, which can be expected to play out again.

Mechanical flows dominate the market, as there is little active trading going on, which means that the tailwind of time passing during a quiet period is sufficient to cause a drift higher for equities.

While these flows are strong, with support from the current momentum market and re-covered market breadth, equity positioning has now reached unsustainable levels.

It is only a question of time until this extreme normalizes via a sharp pullback.

Trading Portfolio November 25

Meta Strategy Trading Portfolio – Probability Map Update.

Springboard Activated

With a third S&P 500 island reversal in a row, the springboard into year-end has been activated.

We are seeing tell-tale signs of a market that is heading into a volatile blow-off top.

Money is flowing into the most speculative areas of the market and those are beginning to show parabolic moves.

This makes the current environment a difficult market to trade and it is essential to take a step back and follow the high-conviction narrative of positive, structural supply and demand flows into next year to keep on the right side of an increasingly volatile market.

Trading Portfolio November 18

Meta Strategy Trading Portfolio – Probability Map Update.

Year-End Rally in Jeopardy?

Last week ended in a washout that looked rather similar to the pre-election dip two week’s ago.

My primary scenario remains that this is a dip to be bought.

In fact, the increased two-way volatility of the last two weeks has been my preferred outlook even before the election:

Any violent, unexpected pullback, just as everyone feels safe in a new low-volatility, post-election environment, could serve as a springboard for a market up / volatility up dynamic into the new year.

Trading Portfolio November 11

Meta Strategy Trading Portfolio – Probability Map Update.

Make Hay While The Sun Shines

Frequently, popular narratives about large moves in the stock market hide much more relevant mechanics of structural market flows.

A glimpse at the major demand drivers, in a positive year heading into the fourth quarter with a well-hedged election event in place, made it possible to lay out the most probable scenario several weeks ago – there was no need to predict a winner of the US presidential election.

In a double whammy Vix crashed from an unnaturally elevated level following a clear election result, which accelerated massive dealer buybacks of S&P futures as the value of hedges collapsed.

A major part of those vol-induced buybacks was realized immediately, but tailwinds from options markets, re-leveraging of vol-controlled funds, and re-investment of gains will likely persist all the way into January.

Trading Portfolio November 4

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Thursday –

Volatility Collapse Incoming

Last Thursday, a washout in stocks managed to put a dent in the prevalent short-term, buy-the-dip behavior, but this pre-election period still remains one of the quietest on record overall.

Because of perceived uncertainty, this election is very well hedged, which is visible in an uncommonly elevated Vix.

Once the event has passed, volatility will compress as a major need to hedge disappears, which causes a constant tailwind for stocks due to the buybacks released by a reduction in dealer hedging.

At the same time a well-hedged event is unlikely to lead to an outright collapse in stocks.

Trading Portfolio October 28

Meta Strategy Trading Portfolio – Probability Map Update.

Seasonality’s Comeback?

Finally, a shallow pullback before the US presidential election has offered a good opportunity to add long exposure.

Weakness is being bought aggressively in anticipation of the strongest seasonal period of the year and each sell-off bounces back almost immediately.

It is well possible that we will see a deeper second leg down that puts a dent in this short-term, buy-the-dip behavior.

If the pullback remains shallow, we have to remain aware that a portion of the widely expected year-end rally has already been pulled forward and sharp, temporary pullbacks in November and December are likely to happen despite the positive seasonality,

Trading Portfolio October 21

Meta Strategy Trading Portfolio – Probability Map Update.

– Wednesday Positioning Update –

A Last Window for Weakness

The best season for stocks is nearly upon us.

Demand is high due to a number of factors that cause liquidity to flow into the market, especially after US presidential elections.

In 2024, however, we have seen a tendency for seasonal effects to be anticipated and pulled forward.

The coming week is a last window for potential seasonal weakness with maximum election uncertainty going into the ballot date on November 5th.

A sharp pullback would be very healthy in my opinion, because it would clear out potential headwinds to a year-end rally scenario.

Should we see continued resilience over the next two weeks, I would expect a more muddy fall season riddled by traps.

Trading Portfolio October 14

Meta Strategy Trading Portfolio – Probability Map Update.

Weird VIX

While event volatility for the upcoming US presidential election is going through the roof, the S&P 500 couldn’t care less and simply runs from all-time high to all-time high.

Markets seem to have matured and realize that whoever sits in the White House does not matter for stock market returns – it makes zero difference historically.

The data shows quite clearly that there is a distinct edge in realizing that currently elevated volatility is due to a likely nothing-burger event from the stock market’s point of view.

Trading Portfolio October 7

Meta Strategy Trading Portfolio – Probability Map Update.

How much does overwhelming consensus matter?

There is wide-spread consensus about the most probable future path for stocks and a majority of traders anticipate a weak September to October period, followed by a rally into year end.

Does such consensus lead to lower chances for the event to occur?

Or will a positive feedback loop make it even more likely for a powerful year-end rally to play out in 2024?

I have a convincing hypothesis that the coming period of strength is rooted in the structure of supply and demand flows in the market.

To a large degree these structural flows happen in any case. They are independent of investor’s consensus expectations, election results, or most other factors.

Trading Portfolio September 30

Meta Strategy Trading Portfolio – Probability Map Update.

Quiet Resilience

It is no mean feat for the S&P 500 to put in a positive month during the weakest seasonal period in a US presidential election year.

The index managed to comfortably hold a decisive breakout to new all-time highs against considerable short-term headwinds last week.

This sets up a positive base for the final quarter of 2024 as quiet strength is building in equities across the board.

Trading Portfolio September 23

Meta Strategy Trading Portfolio – Probability Map Update.

Decisive Breakout meets Red Week

The S&P 500 finally staged a decisive breakout to new all-time highs last week, which is a strongly bullish development.

In-line with this view is the start of a fresh interest rate cutting cycle, which is supportive of higher stock prices over the medium- to long-term, if the US economy can avoid falling into a recession.

For now, recession probabilities remain low despite some warning signs in leading fundamental indicators.

Unfortunately, the picture is not quite as clear cut when we consider a few short-term headwinds that may play a role over the coming 2-4 weeks.

The week after September OpEx has traditionally been the very worst week of the year.

Strong momentum may be challenged over the short-term, but from mid-October on the picture becomes clearer, as strong seasonality and supportive year-end flows align with a positive technical and fundamental picture.

Trading Portfolio September 16

Meta Strategy Trading Portfolio – Probability Map Update.

Reversal Week

The current market is messy and filled with traps.

But stocks are on the verge of confirming a new rally phase early in the cycle.

Alternatively, if failing to break out, equities may comply with traditional seasonal weakness and build out the current base for another 2-4 weeks.

This is where we stand: As the historically weakest 2-week period of the year begins, the FED is poised to start an interest-rate cutting cycle and all the while pre-election uncertainty is in full swing.

What better time for the market to flummox all skeptics and begin a rip-roaring rally?

Trading Portfolio September 9

Meta Strategy Trading Portfolio – Probability Map Update.

Anticipatory Positioning meets Self-fulfilling Prophecy

September historically is the weakest month of the year, yet everybody knows that.

Such well-telegraphed anticipation of weakness didn’t seem to matter much, as stocks began to sell off straight away during the first trading day of the month, giving back roughly half of the August rally.

Last week’s price action was a belated aftershock to the vol spike of August 5th that is most likely to form a solid higher low considering supportive market breadth, positive breadth thrusts, as well as volatility collapse signals in recent weeks.

Trading Portfolio September 2

Meta Strategy Trading Portfolio – Probability Map Update.

– Wednesday Outlook Add-on –

Consolidation Breakout

After moving in a tight sideways range for two weeks the S&P 500 and the Nasdaq have staged a breakout from bullish consolidation patterns under increasing volume in the last trading minutes just before a long Labor Day weekend.

Such high, tight bull flags are considered to be some of the most bullish continuation patterns by momentum traders.

Price just powers on without looking back.

A successful breakout would have considerable support from recent breadth-thrust and volatility-collapse signals.

At the very least those are signs to not bet against a continuation of the uptrend in stocks.

Trading Portfolio August 26

Meta Strategy Trading Portfolio – Probability Map Update.

A Change in Market Patterns?

It is obvious that financial markets, as a self-reflexive mechanism, are always changing.

Still, astonishingly often an old adage holds true: The more things change, the more they stay the same.

A shift looks to be occurring around two interconnected patterns that historically have led to excellent trading opportunities over different time horizons and deserve a closer look: Breadth Thrusts and V-Bottoms.

Trading Portfolio August 19

Meta Strategy Trading Portfolio – Probability Map Update.

The Script Has Flipped – Again

Flip-flopping markets that whipsaw from one regime to another and back are some of the most difficult trading environments, because they play havoc with the trader’s mindset.

The simple solution to lingering uncertainty is to have a plan and follow it. Over time net-positive outcomes will add up.

The most relevant data for the current market is based on volatility and tells us that the environment has moved back to a Quiet Bull Market.

However, increased caution over the next weeks remains warranted.

Trading Portfolio August 12

Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Tuesday / Thursday –

Volatility Is Here To Stay

Just like low-volatility conditions stayed with us for months-on-end during the steady uptrend since October 2023, last week’s volatility upheaval will very likely influence the stock market for weeks to come.

It is time to be very flexible and to take some risk off the table.

My solution to the sudden expansion in the range of possible outcomes is to scale down position sizes and concentrate on distinct price patterns that reflect human reactions to an upset of deeply ingrained expectations of continued calm conditions.

Trading Portfolio August 5

Meta Strategy Trading Portfolio – Probability Map Update.

– Update Tuesday –

Return Of The R-Word

Two data points towards the end of last week, the ISM Index and the Unemployment Report, re-ignited fears of an incoming recession.

Suddenly bad news is being priced in as bad news, as the FED policy expectations game is ending.

The market is moving towards an important inflection point:

Often a rapidly negative shift in sentiment, positioning, etc. clears the air during a temporary market correction and presents an excellent opportunity when the bull market resumes.

On the other hand, such excellent opportunities occur hand-in-hand with heightened risk of the market rolling over into a recessionary bear market, which should definitely trigger a move to a risk-off position.