Status of the KP Trend Model
The KP Trend Model returned to a cautious Yellow status on Thursday, December 26, 2025, effective the close of trading.​​​
​
The Yellow regime condition has signifantly less favorable performance characteristics than Green, with an annualized return of 10.2% and an average Sharpe Ratio of 0.50. Details in the graphic below.
The KP Market Model has issued signals in real time since January 2006, and the daily performance of earlier years were simulated, applying the identical formula parameters we use today.
​
In our experience, success at investing is mostly about aligning your portfolio with the underlying trend, and just a little bit about fund choices or the selection of individual investments.
​
The Yellow regime suggests reduced policy exposure to US equities — at least for the time being. The Model's values are updated every day. At a time when global equity valuations are historically extreme and the majority of equity portfolios have defaulted to passive (buy-and-hold) approaches, Yellow feels like an appropriate exposure.
​​​​​​​
The KP Trend Model adds value by actively shifting market (beta) exposure with the objective of managing volatility and portfolio drawdown. Over a full bull/bear cycle, our process will also likely to improve returns (CAGR), but our Model's priorities are protection and then performance —in that order.
The KP Trend Model averages about eight shifts of exposure a year. A self-directed 401(k) investor might expect to make an allocation change every two months or so. We have seen times when the Model has remained unchanged for over nine months, and others when it has made three adjustments in one month! Keeping up with the current status of the Model, at least weekly, is important.
Managing your portfolio is a long-term journey, but it can be significantly supported by a mathematical process such as ours that has delivered very workmanlike metrics in real time over 20 years. Of course, even a well-designed model such as ours will occasionally get the timing wrong, but it is designed to recover from those errors and to keep moving forward.
Individual investors play the central role in their own success when they follow these model signals in a disciplined manner.
We make every effort to update this status page within one day of a signal change. Historical performance results in the table above assume that all required transactions/adjustments were implemented at the close on the trading day following a signal.
BACKGROUND —
The KP Equity Trend Model has two components:
(1) The KP-1 Intermediate-Term Model, — based solely on internal (non-price) market data and it changes directions roughly 7.8 times a year. This model was introduced in January 2005, and has generated daily signals since then.
(2) The KP-2 Long-Term Model is based on price information only and shifts directions less than once a year (0.7 times). This second, long-term, component was developed for additional balance and as a synergistic companion to KP-1. It was added to our process in November 2011.
Both models have been updated daily since their introduction. In addition, they have been evaluated further ex post to December 31, 1996, using historical market information. We have found that the patterns of past markets have the same signature as present markets.
We believe our firm has accumulated and verified one of the most accurate databases of US daily market history.
Formula parameters for the models have been applied consistently over these 28 years and they are the same ones we use today.
Current charts of the KP Trend Model and the two component studies can be found on the Charts menu tab of this website.