Stock Market Forecast for Thursday, 5/22/25

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

The Previous Signal

******* For Wednesday, 05/21/2025 *******

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:

052025 Core [ 3/**] +100 ( 47.80%) >>> [138/**] -100 ( 41.79%) >>> [147/55] +100 ( 47.27%) >>> [202/ 7] -100 ( 42.86%) >>> [226/15] +100 ( 60.00%)

The Core Rule remains in the LONG state, but now we have a series of 4 successive override rules that take us SHORT (#138), LONG (#147), SHORT (#202), and then LONG again (#226). So, this gives us a 'raw' LONG signal, but in actuality this is a pure coin flip that should be disregarded. We will instead look hard at our other indicators, and in view of the ones summarized below, we will once again have a CASH/HEDGED stance. And, of course, the overnight Market futures are staying rather negative, thus providing some corroboration for our conservative signal.

These are the major negative factors:

(1) the EZ Indicator is rather negative at -16 (actually, more like -20).

(2) the SURVEY.INP prediction data being is strongly negative.

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

(4) the GSI is still slipping slightly and is only at 52.6%. (% of 1000 Grail System stock/ETF signals in a 'buy' state,)

(5) the CNNI remains negative (-0.83%).

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

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

“Signal 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) has risen to 91.1%. The CASH/HEDGED stance for Wednesday is thus much more conservative than the current/projected risk levels of the stock Portfolios, but our indicators suggest that caution must be exercised and subscribers should hold off and not start loading their portfolios with new Longs.”

Our CASH/HEDGED recommendation for Wednesday was quite accurate, and although the ‘techs’ made a determined effort to climb into the Green, they eventually succumbed and dropped about -1.40% for the day.

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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 Thursday is presented below]