Stock Market Forecast for Friday, 6/20/25

Daily Predictive SOFIS Signal, Equity Signals, Risk Levels, and Portfolios (since 2004)

The Previous Signal

******* For Wednesday, 06/18/2025 *******

Portfolio Status: Hedged for Wednesday

SOFIS Signal: CASH

SOFIS Allocation Level: 0%

SOFIS Critical Periods: (1) 0910-0920 CT, (2) 1245-1305 CT

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Commentary on the Previous Day’s Signal

For Wednesday, I had said: “the SPYPRED5 S&P Model 'Rule Chain' is:

061725 Core [ 3/**] -100 ( 47.78%) >>> [261/17] +100 ( 47.06%)

The Core Rule remains in the SHORT state, but we then have a low-accuracy LONG Rule (#261), which of course gives us a 'raw' LONG signal. This suggests some possible Market strength on Wednesday, especially since there will be a Fed rate announcement at 1300 CT, which as usual will be a Market-mover. The question, of course, is whether possible positive omens from the Fed will fully counterbalance the growing concerns about the possible escalation of the US involvement with the Israel/Iran ongoing war. Based upon the evidence below, our best guess is that the Market will be lucky to close 'flat'.

Therefore we will stick with our familiar CASH/HEDGED signal for Wednesday.

Let's now examine the overall set of indicators:

These are the major positive factors:

(1) the SPYPRED5 Rule Chain gives us a 'technical' LONG signal, although the LONG is due to a rather unreliable LONG Rule.

(2) the legacy S&P Model (SYSTEM6) has flipped to the LONG state.

(3) the SURVEY.INP prediction data is not too negative at -2 (the range is -4 to +4), with possible strength in the DOW.

(4) the CNNI is fractionally stronger (-1.23 --> -0.31), but remains far from being in LONG TREND territory,

These are the major negative factors:

(1) the GSI remains very low, and is staying constant, being now at 15.5%. (15.5% of 1000 Grail System stock/ETF signals are in a 'buy' state,)

(2) the SPYPRED5 'core' Rule is SHORT.

(3) the EZ Indicator is still negative at -5.

(4) the PredTablSigs prediction pattern is negative (?-/S).

(5) the CBOE Put/Call Skew is pretty high at 154.36,

(6) our long-term signal remains in the HOLD state (see below)

(7) crude oil prices are still rising, obviously in response to the Israel/Iran situation.

(8) our Preprocessor has dropped from a holding of 171 equities to just 166.

“So, we have a CASH/HEDGED signal for Wednesday.”

“Signal Corroboration: The 6-stock Tech Portfolio is now 33.4% Long, while the combined average Long allocation for all 3 stock portfolios (TECH6, SUPER08H, and SUPER15H) has fallen to 68.9%. The CASH/HEDGED signal for Wednesday is thus still much more conservative than the stance suggested by the current/projected risk levels of the stock Portfolios. However, our indicators certainly are flashing caution signals. There is also the lurking fear that Khamenei’s talk about a ‘great surprise that the world will remember for centuries’ signifies that Iran may ‘already’ have at least one nuke!”

We had another good signal for Wednesday. I had said that “the Market will be lucky to close 'flat'“, and that is pretty much what happened. Only the small-caps managed a modest gain for the day as the Fed’s rate announcement ‘did not satisfy’ investors, and the continued uncertainty about the Iran situation, and associated increases in oil prices managed to dampen investor sentiment. The CASH/HEDGED stance was thus perfect.

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The Current Stock Portfolio Strategy

The 3 stock portfolios that I maintain on Collective2, the Tech6, Prime6, and SUPER08F, are designed so that they allocate no more than 80% of available funds on selected stocks. These are always LONG positions. The other 20% is set aside for buying or selling MNQ or MES contracts (approximately 1 contract per $50K of stock holdings), with hedging accomplished in Tech6 and Prime6 by selling 1 MNQ contract, and in the SUPER08F this is accomplished by selling 1 MES contract. Hedging is especially important when the portfolios are maxed out on stock positions, and obviously less so if the portfolios have been reducing their holding size in the face of Market weakness ('cash hedging'), as they are designed to do. Now, the current strategy also calls for 'buying' 1 MNQ or MES contract if several conditions are met: (1) we have a LONG signal from the SPYPRED5 Model, (2) the legacy S&P Model (SYSTEM6) is also LONG, and (3) the EZ Indicator is at least > 0 (positive). This means that we obtain some extra benefit from setting aside 20% of equity, permitting the stock portfolios to exert a small amount of 'leverage' when the Market looks good.

The current Portfolio strategy can thus be summarized as follows:

(1) Tech6 Portfolio. A maximum of 6 high-performance Tech stocks that account for 80% of portfolio value. The remaining 20% will then either stay in Cash (if a weak LONG day is expected), or will be used to provide a hedge (selling an MNQ futures contract), or used to 'boost' performance by buying an MNQ futures contract -- all based upon the SPYPRED5 signal and its EZ Indicator and SYSTEM6 associated signals.

(2) PRIME6 Portfolio. A maximum of 6 stocks that are chosen from a far larger 'pool' (techs, S&P 500, and small-caps). Again, 80% of funds are used to buy a maximum of 6 stocks, and the remaining 20% is used to protect, or to boost gains for a given day, i.e., -MNQ (a hedge), +MNQ (a boost), and $$$ (neutral).

(3) SUPER08F Portfolio. A maximum of 8 stocks from carefully selected companies (that all have been in business since 2002 with only a few exceptions). Although the same 80%/20% strategy is employed, this time with buys or sells of MES (instead of MNQ), the stocks tend to turn over much more slowly so that the trading frequency is quite tolerable. The PORTSIM portfolio machinery is used to guide the trades, rather than using the higher-frequency signals that are output by the SPYPRED5 model. The predictive models, of course, 'are' used to determine how to handle the 20% equity reserve, i.e., +MES, -MES, or Cash.

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SOFIS Signal and TECH6/SUPER 8/SUPER 15 Stock Portfolios

[The detailed Forecast for Friday is presented below]