Stock Market Forecast for Friday, 5/23/25

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

The Previous Signal

******* For Thursday, 05/22/2025 *******

Portfolio Status: Hedged for Thursday

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

052125 Core [ 3/**] +100 ( 47.80%) >>> [197/26] -100 ( 61.54%) >>> [273/43] +100 ( 58.14%)

The Core Rule remains in the LONG state, but now we have a series 2 successive override rules that take us SHORT (#197), and then LONG (#273) again. So, this gives us a 'raw' LONG signal, but in view of the greater accuracy of the SHORT rule, and taking account of the Market weakness on Wednesday, and in consideration of the other factors listed below, we are going to stick with the familiar CASH/HEDGED stance. In particular, after a 'down' day, it makes no sense to try to justify a LONG when key indicators like the GSI are still slipping.

These are the major negative factors:

(1) the EZ Indicator is rather negative at -10.

(2) the SURVEY.INP prediction data is rather negative, at least for the 'techs'.

(3) the PredTablSigs pattern is now showing a weak 'SS/SS'.

(4) the GSI is still slipping slightly and is only at 52.2%. (% of 1000 Grail System stock/ETF signals in a 'buy' state,)

(5) the CNNI is barely positive (+0.45%).

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

(7) more of our Class B Voted Signals (140 stock/ETF Models) are switching from CASH to SHORT states.”

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

S”ignal Corroboration: The 6-stock Tech Portfolio is now 100.0% Long, while the combined average Long allocation for all 3 stock portfolios (TECH6, SUPER08H, and SUPER15H) is still 91.1%. The CASH/HEDGED stance for Thursday is thus much more conservative than the current/projected risk levels of the stock Portfolios, but once again our indicators suggest that caution must be exercised and subscribers should hold off and not start loading their portfolios with new Longs.”

The CASH/HEDGED stance was good for Thursday as the Market closed flat/mixed with only slight gains and slight losses. A LONG stance would not only have produced very little gain, but it would also have risked a falling futures market during Thursday’s evening session … which is currently starting to develop.

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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]