The Day Hagan Catastrophic Stop model remains at 77.3%. A 77.3% reading is a "stay fully invested, no major defensive action required" signal — comfortably above the action thresholds and consistent with a constructive risk environment. The model would need to drop roughly 37+ points (to below 40% for two consecutive days) before triggering the Catastrophic Stop signal.

The DH Smart Core Equity Portfolio is designed to invest in companies that we believe have the potential to deliver excess returns through positive economic profitability, solid balance sheets (quality), meaningful cash generation (profitability), and trading at considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.

In April, the U.S. stock market was supported by robust corporate earnings, renewed interest in artificial intelligence, and economic data that signaled ongoing growth. The Nasdaq, S&P 500, and Dow all posted strong gains for the month, led primarily by large-cap technology, software, semiconductor, and AI-related companies.

April delivered a classic late-cycle macro plot twist. Equities sought to celebrate AI, while bond markets had to reprice the risk that inflation was not finished. The month’s defining shock came from energy. March CPI, released April 10, rose 0.9% month over month and 3.3% year over year, with energy up 10.9% and gasoline up 21.2%, the largest monthly gasoline increase recorded.

April was a challenging month for global fixed-income markets, with higher energy prices, persistent inflation, and waning hopes of quick central bank rate cuts. In the United States, the March Consumer Price Index (CPI) climbed 0.9% month over month and 3.3% year over year, with energy prices making the biggest impact—gasoline alone rose 21.2% in March.

The Day Hagan Catastrophic Stop model decreased to 77.3%, from 86.4% last week. The decline was driven by High-yield bond breadth shifting from bullish to negative. At 77.3%, the model continues to indicate that investors should maintain benchmark equity exposure.

The Day Hagan Catastrophic Stop model increased to 86.36%, up from 81.82% last week. The improvement was driven by an intermediate-term trend/momentum factor reversing from negative to neutral.

This follows the Stock/Bond factor turning positive two weeks ago, the narrowing in High-Yield option-adjusted spreads discussed three weeks ago, and the improvement in both equity and High-Yield bond breadth (even with Friday’s weak participation at new all-time highs—more below). The model continues to indicate that investors should maintain benchmark equity exposure.

The Day Hagan Catastrophic Stop model rose to 81.82%, up from 63.64% last week. The improvement was driven by the Stock/Bond factor reversing to a buy signal for equities, along with stronger short-term measures of economic activity. This follows the narrowing in High-Yield option-adjusted spreads discussed two weeks ago and the previously noted improvements in both equity and High-Yield bond breadth.

The Day Hagan Catastrophic Stop model increased to 63.64% from 59.09% last week. The increase was due to High-Yield option-adjusted spreads narrowing over the last week. The model indicates that investors should maintain benchmark equity exposure.

Fixed income markets in March were shaped less by a benign disinflation narrative and more by a late-month stagflation shock tied to the war in Iran and the surge in oil prices. U.S. Treasury yields rose sharply over the month, with the two-year posting its biggest monthly increase since October 2024 and the 10-year rising by nearly 40 basis points before retracing part of the move in the final days of March (and after the April 3 payrolls report).

In March, international equity markets behaved less like a macroeconomic battleground and more like a referendum on energy security. The month’s dominant force was the escalation of the U.S.-Israeli conflict with Iran, which disrupted traffic through the Strait of Hormuz, sharply lifted Brent crude prices, and forced investors to reprice inflation, growth, and risk premiums across Europe and Asia.

U.S. stocks faced a turbulent March, despite a strong rebound on the final trading day. Over the month, the S&P 500 index declined 5.1%, the Dow Jones Industrial Average dropped 5.4%, and the Nasdaq Composite fell 4.8%. Investors spent much of March grappling with higher energy costs, renewed inflationary pressures, and persistent concerns about slowing growth.

The Portfolio is designed to invest in companies that we believe have the potential to deliver excess returns through positive economic profitability, solid balance sheets (quality), meaningful cash generation (profitability), and trading at considerable margins of safety (valuation).

The Day Hagan Catastrophic Stop model increased to 59.09% from 45.45% last week. The increase was due to improvements in Equity and High-Yield breadth indicators. (Note: Both measures would return to sell signals should the markets reverse lower.) The model indicates that investors should maintain benchmark equity exposure.

The Day Hagan Catastrophic Stop model declined to 45.45% from 50.0% last week, driven by a widening of high-yield option-adjusted spreads, which points to building market stress. However, the model remains above the critical 45% threshold, indicating that investors should maintain benchmark equity exposure.

The Day Hagan Catastrophic Stop model level declined to 50.0% as the intermediate-term trend factor turned negative. The overall model remains above the key 45% threshold, indicating that investors should maintain their benchmark equity exposure.

The Day Hagan Catastrophic Stop model, as of today, has increased to 68.18%. The model indicates that investors should maintain their benchmark equity exposure.

The Portfolio is designed to invest in companies that we believe have the potential to deliver excess returns through positive economic profitability, solid balance sheets (quality), meaningful cash generation (profitability), and trading at considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.

In February, rates markets were driven by a mix of softer inflation data, a slower but still expanding labor market, and heavy Treasury supply. The January CPI report, released on February 13, showed a 0.2% month-over-month rise and 2.4% year-over-year inflation, keeping the disinflation narrative intact.

International equities in February responded to uneven G20 growth data, steady but moderating inflation, and stable global rate expectations. Flash PMIs released during the month showed services activity continuing to anchor expansion across much of the developed world. The euro area composite index remained slightly above 50, driven by services, while manufacturing stayed weak.