The Trifecta Front In The Stock Market

Introduction

The PPO Approach on Momentum/Trend

When the market has made trendless moves since 2020, the sophisticated algorithms or the delicate chart/graph techniques have failed to yield any indicator for the future market movement.

The “Paper-And-Pencil-Only (PPO)” Approach has introduced, and successfully tracked the market momentum/trend, and finally observed the current Uptrend, starting on Mar 31, 2023.

The PPO Approach is 1) to classify each market movement with “P” (as a plus), and “m” (as a minus), ignoring the size, 2) to identify a momentum/trend.

The approach has been proven. After hitting the clear sign of Fly, I submitted the previous article, titled, “The Elephant (SPY) Is Ready To Fly”, Jul 05,2023.

In a sense, this article is the second part of the previous one. This time I am really confident that it’s up – “The D Day.”

The PPO Approach on Trifecta Score

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Since the last week of Dec 2022, the multiple Trifectas ratcheted the stock market, an extension of the PPO Approach has been required. Table 1. shows the result.

As the NOTE 2, 3, and 4 describe, 1) “Tp” is the Trifecta for Bull (plus), 2) “Tm” is the Trifecta for Bear (minus), “D” is a Double of a 1”m”/2”P”, and “S” is a Single of 2”m”/I”P”. (Counting “D” and “S” with “P”)

The Focus

I revised the draft broadly, and submitted it with five readable Tables.

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The Fate of January Trifectas: Tp vs. Tm was 13 vs. 7

As shown, Table 1.,in January, we had 13 plus trifectas [Tps] and 7 minus trifectas [Tms]:

The 13 Tps consist of a) 1 Tp in the four days in a row [IAR], b) 1 Tp in the three days IAR, c) 1 Tp in the two days IAR, and 4 Tps in one day.

These were significant enough: “Market Insider [MI]” advocated to buy the market as perhaps a bull. The actions of Mi clearly disregarded the minus trifectas, consisting a) 2 Tm in the two days IAR, and 3 Tm in one day. These Tms will work against the Bull advance in the later months.

The Feb Bear Rout: Tp vs Tm was 7 vs 7

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This was the first tie score for bears and bulls. Bears threatened the then Uptrend, which was re-started in Dec 2022, making almost another toppling of It. SPY and QQQ, whose overlapping is just 46%, decent quite a lot, leading by falling FAMANG.

The Stock Market in Feb

The majority of investors have been disoriented since Mar 2021. The wrong Pandemic Recession was declared by the National Bureau of Economic Research [NBER] in Mar 2020, just one year earlier.

The economy has fully recovered from the shock of the Covid-19, and investors have thought that the economy is expanding, and they have searched for the coming recession.

The right Business Cycles have been in the Great Expansion, starting in Jun 2009, and the right Market Cycles have been in the super bull market, starting in Mar 2009, as explained in “Backing To The 2009 Origin” May 20, 2023, and “The Pandemic Recession: Is It A Right Call?” Mar 11, 2023.

The bear-camp investors, nevertheless, believed that 1) The market (SPY)’s steady advance was “a bear-market rally [BMR]”, meaning “short-lived.” The so-called BMR, however, had been steady and resilient, getting more steam month after month. The reason was obvious: The market was not in a “bear” market but in fact, was in a genuinely strong Bull market, starting in Mar 2009.

Finally, they became nervous and frustrated. In Feb, they revolted, as shown in Table 2.

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The Mar Trifectas Charged The Market Again: Tp vs. Tm was 12 vs. 5

The last month of 1Q, Mar, recovered the legitimate market character, bullishness, right next from Feb, when the market was upside down. Historically, the end of Quarter, half Year or Year has been strong. The Mar nicely repeated the history.

The market situation was normalized by aligning the monthly trifecta distribution, business cycles (an Expansion), market cycles (a Bull market), the market momentum/trend (Up momentum/trend), and so on.

It would be a perfect time to go ahead, but I determined to be in an “inaction” mood, considering a “Cruel Month to Korean History”, May. In retrospect, it was a wise decision.

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The May Trifecta’s Reversion: Tp vs. Tm was 8 vs. 10

The May figures have no flavor, only veering the bearish maneuver of Feb, the positive movement of Mar and the following rest of Apr.

In May, the battle was much fierce, and bears made the first win, after a tie in Feb.

The Jun Trifecta’s Launch Signal: Tp vs. Pm was 12 vs.8

The Signal was on: 6 Trifectas were in Six Days (Jun 07, Jun 08, Jun 09, Jun 12, Jun 13, and Jun 14) In A Row.

The Final Message

It’s extremely difficult for me to make up my mind, opposing our parents (mine and in law) to come in America with wife and two sons in 1973, as is today’s market decision.

I no doubt convinced myself it’s time to Fly.