Weekly Update 12.7.24

In last week’s update, we observed signs of early market exhaustion, though there remained potential for moderate gains. Over the course of the trading week, the QQQ and SPY indices moved higher, while the DIA experienced a slight decline. This performance aligns broadly with our model’s expectations, particularly regarding the “probability of positive return” metric. This metric indicated a neutral to slightly negative probability relative to our baseline or “nominal” market probability.

We believe this tool provides valuable insights for assessing medium-term risk tolerance within a portfolio. When the market’s probability is neutral or slightly below the nominal baseline, we aim to construct portfolios that balance the opportunity to capture slight gains with protective measures to mitigate potential downside risks.

Looking ahead to next week, our quant model continues to produce similar outputs. While the probability of positive returns remains subdued, we cannot rule out the possibility of a sudden, sharp downward move in the markets, as certain vulnerabilities persist in our model’s data.

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.