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May ’24 Newsletter

Dear TuringTrader Member,

It’s already May, and we are painfully aware that we skipped last month’s newsletter. We got sidetracked by having to replace our site’s payment gateway. This serves as a stark reminder that small businesses are oftentimes vulnerable to unexpected business risks – but that’s a story for another day. The good news is that we are back to normal and resuming work along our roadmap.

Market Vane

The first topic today is Market Vane. The signal flashed bright red at the end of April, leading most strategies to exiting their stock market exposure. Unfortunately, that means we missed out on the rebound that followed just a week later.

Before being overly disappointed it is worth reminding ourselves of the investment objective. For most of our strategies this is not to beat the S&P 500 in absolute terms. Instead, we aim to reduce risks and improve risk-adjusted returns. From that angle Market Vane‘s decision makes much more sense. Even though in this particular case staying in the market would have been preferable, in the long run it is still better to err on the cautious side.

Market Vane, May 2024

Looking at the current situation, we should re-enter the stock market for June. While unemployment is still indicating tough economic conditions, market momentum rebounded and warrants a bullish outlook.

You might wonder why Market Vane considers the economic environment bearish. Our signal uses a variation of the Sahm Rule to determine recessions in real-time. Just like Sahm’s signal, we look at unemployment figures. However, we prefer the seasonally adjusted continued claims, as these are less jittery than the initial claims. Based on these figures, we calculate threshold levels that need to be crossed before we recognize a regime change. To go from bearish to bullish, the trigger point sits 10% below the peak level reported since we switched to bearish regime.

unemployment 2023-2024

Looking at the trajectory of unemployment, we see that there is still a long way to go. While unemployment stopped rising in late 2023, it also didn’t come down since. It is this bearish stance on the economy that keeps Market Vane more nervous than it would usually be.

Surprise Rebalancing

Some members contacted us regarding a frustrating experience last week. Buoy, which is supposed to rebalance on Wednesdays was in BIL on Wednesday 05/15 – and several weeks before that. On Thursday 05/16, it switched to LQD and SHY, even though that was outside of the strategy’s rebalancing schedule. Even worse, on Friday 05/17 it reverted back to BIL. And to add some mystery, none of this shows up in the historical asset allocations. Is TuringTrader broken?

The short answer is no – even though we find this as frustrating as you do. We’ve got back-adjusted quotes to blame for events like this and, unfortunately, there is no easy remedy. We purchase our quotes from a reputable data vendor, but because of the complexity of data curation, issues like this can happen at any time. I wrote a more detailed article about what’s going on, and how this can happen. Luckily, this should remain a rare event.

As always, I want to thank everybody who reached out over the past month with questions, comments, and suggestions. It is an honor to have you on our site. If you like what we do, support our growth by sharing with your friends how TuringTrader adds value for your investing.

Stay tuned for further updates,
All the best


Felix Bertram
Founder of TuringTrader.com



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