Trend Model Fully Invested

Posted by on Wednesday, Sep 11, 2013 in Featured Slide | 0 comments

Trend Model Fully Invested

The Keller Partners Trend Model weathered the violent February 2018 correction and remained in Green status throughout.  This implies a full commitment to US equities.  The Intermediate-Term Model is gaining strength again and the Long-Term element never lost it — it remains close to its highest levels in two decades and has been positive since April 2016. For all of 2017, an excellent year for stocks, the KP Trend Model was Green for 96% of all trading days.

Our trend analysis work is based entirely on internal market data and forms its conclusions independent of economic inputs or Wall Street views.

Over the last two decades, the KP Model has classified 52% of all trading days as Green, or “risk-on” and roughly 35% of all trading days as Transitional (Yellow) mode.  Green is by far the most common color and is statistically associated with returns that are almost twice “normal” — 14.3% annualized, versus 8.1% average for all of the trading days over the last 19 years.  In addition, the volatility of these excellent daily returns is well-below average.  Green is the ideal environment in which to own stocks.

For our actively-managed portfolios, whenever the market is green, we hold minimal cash balances until the the color shifts.  When it does, we adjust our cash holdings quite radically and, occasionally, our approach can become aggressively defensive. The Red market condition is quite rare, having accounted for only 14% of all trading days in the 19 years since 1998, but these high-risk periods were associated with some of the most hazardous environments for risk assets.

Statistical profiles of all three “colors” of the KP Trend Model are summarized on the back page of the KP Model Fact Sheet, available for download here.

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