I don't understand the comment about "a bullish transition will occur soon". It appears that we've been in a bull market for a while now. The market hit a new all time high just a few days ago. So what's the transition?

A bullish transition of *this omen*. It has stayed negative recently, since the first half of 2023. Since the current level of the market isn't an input--it's not a momentum model--the fact that the market has been rising doesn't mean that the signal has been bullish.

A speculation, on the assumption that this signal has added any value at all since the chart I pulled it from:
Times that both the 99-day-rule and this (smoothed) indicator are positive will have a whole lot higher average broad market return than times when they're both negative.
This is often true of any two signals, but in this case both of them are very "slow", which is a good thing. A signal per year is probably a lot more useful (and reliable) than 20.

I had some very nice monetary models like this that I tested some years back. They worked for a long time in the past when inflation was primarily triggered by broadly based wage and price cycles and then choked off by rising policy rates. That hasn't been a very good description of the US monetary environment in the last 10-20 years. My implementation of this model done in 2010 worked nicely 1964-2010, on average, with hindsight. Based on weekly signals, S&P index CAGR +14.8% when bullish and -7.2% when bearish with 2.0 signal changes per year and bullish 62% of the time. But useless on average 2010-2022.

Jim