Hari Seldon Trader

and his trading model for long-term investors


The U.S.economy is recovering. Have markets already priced that?

Status of the economy on October 4h: macro data 

After the tremendous impact of the Covid-19 on daily life of billion people, the US economy showed all the signs of an ongoing recession.
Most of the indicators we consider and which are part of the HST algo to determinate the Fundamental Indicator, had turned rapidly to negative.

The Fundamental Indicator of the HST model turned to negative territory at the end of March 2020, and it quickly went to deep negative, even compared to the great recession 2008-2009.

Then financial markets started a V-shaped recovery, pulled by the unprecedented stimulus given by FED.
But what about real economy? Did it "V" recover also, or is it still in the woods?

Let's see main factors.

House market has been hit (not that hard, after all) and is really performing a "V" recovery now.

Labor market had the worst drop ever. It is showing a "V" recovery, but some sectors are still suffering a lot. The sectors which took advanteges from the Covid-revolution (e-commerce, media remote provider, High Tech in general) are increasing their business, but the many sectors which are still down are more impacting the jobs.

Hence, labor market is still far from normality, and this is affecting the capacity of expenditures of many americans.

Reletaed to this unprecedented uneployment rate, there is a risk of credit crunch, because many people might not be able to pay their open mortgages, house rents, scheduled payments of private cars.

Manufacturing index (which was declining before the Covid crisis) is showing a "V-shaped" recovery, not back to its recent highs  of 2018.

Inflation has lowered first, and it will probably get higher in 2021. All the public interventions made by the Central Bank will probably be paid by higher prices for consumers, or higher tax level.


The above macto data tell us this kind of story: the US economy did not enter into a deep recession, mainly because of the quick intervention operated by the FED.

Economy is recovering quickly, but not as quickly as the financial markets did, so the distance between real economy and financial markets has gone wider. At that point, a correction of prices was inevitable.

During September we had a correction, but not as deep as we were expecting (we were thinking to see S&P500 back to ~3.100 and Nasdaq Composite down to 10.000), and October seems to have reinstalled a bullish environment. 

Now there are three factors driving the market, three forces which are now stalling in an unstable equlibrium:

  • the economy recovering is pushing to a new bull market
  • the possible rise of Covid-19 cases worldwide and new possible restrictions or lockdowns could invalidate the previous point
  • indexes are still overpriced, when we compare the corporates profit expectations with actual prices

During such unstable periods, markets are really hard to predict, because there is no definite trend going.

The illness of the US President, or any other news like that, could turn the course of events in one direction or the opposite.

Being actually positioned CASH, from a selfish point of view, we should hope that a further correction brings prices down, and let us enter Long at lower prices for a more stable bull market.

Final note about the HST model

During last weeks, the HST model has shifted to Aggressive Long a couple of times (on Sep-10 and Oct-02) for one-day only. These were clearly unfortunate moves, which have brought some damages to our HST virtual investments.
Sometimes it happens: when indexes are so close to the inversion levels, we enter and go long, just in time to get a big hit to our heads, and then we turn back to cash.
We should take a step behind and consider that the model works at its best when there is a definite trend, bullish or bearish, which is clearly not today's condition.

Likely, we will see a definite bullish trend only when humanity will have a (tested and safe) vaccine available, and the power of innovation will spread its wings again. 



Write to This email address is being protected from spambots. You need JavaScript enabled to view it. and get more information about daily signals from the HST model released to members.


Who is Hari Seldon

(from Wikipedia)

Hari Seldon is a fictional character in Isaac Asimov's Foundation series.

In his capacity as mathematics professor on the planet Trantor, Seldon develops psychohistory, an algorithmic science that allows him to predict the future in probabilistic terms. On the basis of his psychohistory he is able to predict the eventual fall of the Galactic Empire and to develop a means to shorten the millennia of chaos to follow. The significance of his discoveries lies behind his nickname "Raven" Seldon.

Our team decided to dedicate this work and this model to this amazing character, creating the even-more-fictional character of "Hari Seldon Trader".