Stock Market Forecast for Thursday, 5/29/25

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

The Previous Signal

******* For Wednesday, 05/28/2025 *******

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:

052725 Core [ 3/**] +100 ( 47.89%) >>> [230/31] -100 ( 70.97%)

The Core Rule remains in the LONG state, but we then have an overriding SHORT Rule (#230), one with rather good accuracy, and that gives us a 'raw' SHORT signal. In consideration of the other factors listed below, and DESPITE the strong Market on Tuesday, we are maintaining a CASH/HEDGED stance.

There is still one sigificant positive factor:

(1) the legacy S&P Model (SYSTEM6) remains LONG.

These are the major negative factors:

(1) the EZ Indicator is barely negative at -3, but it is still negative.

(2) the SURVEY.INP prediction data remains negative at -3 (the range is -4 to +4).

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

(4) the GSI has gained slightly but remains very low at 53.05%. (53% of 1000 Grail System stock/ETF signals are in a 'buy' state,)

(5) the CNNI has gone more negative (-0.96%).

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

(7) many of our Class B Voted Signals (140 stock/ETF Models) remain in the SHORT state.

“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) is still 38.9%. The CASH/HEDGED stance for Wednesday is thus pretty well aligned with the current/projected risk levels of the stock Portfolios.”

So, the CASH/HEDGED signal turned out to be correct for Wednesday as the Market closed broadly lower — although not much lower. That gives us a checkmark in the ‘win’ column, but I must admit that President Trump’s tariff policies, Truth Social posts, and judicial pushbacks are really unpredictable, and only reasonably accurate assessments of investor sentiment permit a degree of predictive accuracy, i.e., one may not know precisely what kind of positive or negative news will erupt, but we can get a handle on how investors are likely to react to it. In any event, the stock market should return to a normal level of volatility once we get through the tariff turbulence, and I am certainly looking forward to a little bit of stability for a change.

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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]