Bull or Bear? This AI Trader Doesn’t CareVIEW IN BROWSER
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BY KEITH KAPLAN
CEO, TRADESMITH |
Are you bullish or bearish? As an investor, it’s a question you hear a lot. A brother-in-law asks you at a family barbecue. A CNBC anchor asks a bigshot economist which way the market is headed. Or your broker sends you his annual outlook. Heck, every week going back to 1987, the American Association of Individual Investors has asked its members which direction they think the market is headed over the next six months. Millions of investors all asking the same question… And are all missing the point. The “bull-or-bear” question is a rookie trap. Professional investors – especially the folks inside the world’s most profitable hedge funds – don’t think in these terms. They look for ways to profit whether stocks are going up or down. Nobody understood this better than Jim Simons. He didn’t build the most profitable hedge fund in history, Renaissance Technologies, by trying to predict the direction of the market. Instead, he used advanced algorithms – and reams of market data – to unearth repeating “signals” in stocks that point to high-probability trade setups. Bull market or bear market, it didn’t matter. The signals worked either way. It’s the same principle behind the new AI-powered trading system my team and I at TradeSmith have spent more than a year developing.
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It’s inspired by Simons’ search for signals. And the results have blown us away. In a five-year backtest, a model portfolio of these Signals trades turned $10,000 into $1.2 million. And in 2022 – among the worst years for stocks in half a century – they produced an average gain of 16.6% while the S&P 500 fell nearly 20%. Our mission at TradeSmith is to put hedge-fund-level tools in the hands of regular investors. And our new AI-powered system does exactly that. It evaluates 2.09 million potential trades a day across 2,467 stocks. It runs each one through 847 individual calculations, hunting for the same kinds of signals Simons built Renaissance Technologies on. When the right combination of factors aligns, our system flags it as a high-probability trade setup. And there are hundreds of examples of these setups – each backed by all the proof you’d need to trade them confidently. For instance, on Oct. 30, 2020 – with markets rattled by a new COVID variant – our Signals system flagged a Palantir (PLTR) signal with a 95% historical success rate. It showed that every time Palantir had gone down at least three days in a row… its daily price swings were shrinking… and at least 5,000 U.S. hospitals were accepting new patients… the stock was on the verge of a jump. The forecast called for a 5.8% gain in nine days. The backtested result was even better: 15.1% in seven days. 
What do hospital numbers have to do with Palantir’s share price? It turns out, a lot. Hospitals are some of Palantir’s biggest clients. With about 6,100 hospitals operating across the U.S., a drop below 5,000 open facilities would be trouble for the company's revenue. When hospital numbers fall, Palantir’s business feels it – and so does its share price. Our system is built to find those kinds of connections. Not the hospital figures themselves, but the imprints they leave behind in the data. And remember, this signal fired during the pandemic. Which brings me to an important point about how it works. Bull or Bear Market: Our System Doesn’t CareNo one knows exactly why each signal has a history of preceding a big move. Frankly, it doesn’t matter. Our system is looking for alignments that have worked before – even when there’s no obvious reason why. That means this new kind of trading system doesn’t care whether we’re in a bull or a bear market. It doesn’t need a strong economy or a calm geopolitical environment. It just needs certain factors to align. One example is a signal on Walmart (WMT) that has fired 24 times over the past decade – a rare alignment of three specific conditions in the stock’s price history. WMT has to reverse its trend one day… hit a higher high and a lower low the next day… then close down for the day. When those specific factors align, it’s gone on to post a winning trade 92% of the time. This signal worked in the bull market of 2019 and the bear market of 2022. It even worked in 2017, after one of Walmart's worst earnings reports in a decade. That’s what makes it so powerful today. With the Middle East in constant flux… and rising stock market volatility… you don’t want to be relying on a system that only works in good times. That’s why I hope you’ll check out the AI Signals Trading Event that more than 8,300 investors tuned in for – including your fellow Daily readers – earlier this morning. I’ll walk you through how it works in more detail. You’ll also receive three free recommendations and, in a first for TradeSmith, get to see a live blindfolded trade from our chief developer, Mike Carr. We've been working on this new trading system for the past 12 months. And since becoming CEO of TradeSmith, I've never been more excited about what we've just revealed. So I hope you’ll take some time today to check it out. All the best, 
Keith Kaplan
CEO, TradeSmith P.S. I want to quickly thank our Platinum members – who receive everything we publish now and in the future – for their participation in beta-testing the system ahead of the launch. One beta user, Edward V., reported a perfect success rate on every trade he’d closed so far. Another, John M., called it a “game-changer.” Their feedback on this new project was invaluable. It helped us add features, improve the user experience, and so much more. If you want to learn how you can access the software that our top-tier members have been playing with for months now, go here for more info. |
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