Core Insights - The article indicates a bullish signal for equities as the tactical rules have shifted from a 'flashing yellow light' to a 'flashing green light' due to changes in the Federal Reserve's focus, trend sustainability, and crowd sentiment [1][2] Group 1: Federal Reserve Policy - The Federal Reserve has maintained the fed funds target range at 3.50% to 3.75% and the effective rate at 3.64%, citing stabilization in unemployment and solid economic growth [1] - Recent employment data shows the unemployment rate has decreased to 4.3%, prompting the FOMC to prioritize fighting inflation, with core PCE inflation remaining elevated at 3% [1][2] - The Fed's pivot towards inflation management has led to a delay in expectations for rate cuts, with predictions now suggesting two cuts in 2026 [1][2] Group 2: Market Trends - The primary trend of the S&P 500, defined by the 200-day moving average, has peaked and is currently rising at a 31% annualized rate, expected to fall below 30% soon, which historically correlates with better-than-average positive returns [1][2] - The international trend of the MSCI All Country World ex-US index has also peaked, currently at a 42% annualized rate, down from 45% two weeks ago, indicating unsustainable growth [2] Group 3: Crowd Sentiment - Crowd sentiment indicators show mixed signals, with daily sentiment in the extreme pessimism zone and weekly sentiment in the excessive optimism zone, leading to a neutral crowd rating [2] - The current sentiment conditions have made equities more attractive, prompting an upgrade of the crowd rating to a 'yellow light' from a 'flashing red light' [2] Group 4: Conclusion - Overall, the tactical rules suggest a preference for stocks over bonds, with market conditions favoring equities as yields are expected to fall [2]