Kaufman’sMost Popular Books (available on Amazon)
Trading Systems and Methods, 6th Edition. The complete guide to trading systems, with more than 250 programs and spreadsheets. The most important book for a system developer.
Kaufman Constructs Trading Systems. A step-by-step manual on how to develop, test, and trade an algorithmic system.
Learn To Trade. Written for both serious beginners and practiced traders, this book includes chart formations, trends, indicators, trading rules, risk, and portfolio management. You can find it in color on Amazon.
You can also find these books on our website, www.kaufmansignals.com.
Blogs and Recent Publications
Find Mr. Kaufman’s other recent publications and seminars at the end of this report. We post new interviews, seminars, and reference new articles by Mr. Kaufman each month.
NOVEMBER Performance in Brief
A mixed month for our programs, but the year-to-date are doing well. Now we just need to get past December! We saw a lot of volatility in November, with our programs taking a big hit, then making it back. Much the same as the index markets.
The Weekly Equities Trend program has now recovered to nearly the same as the daily Trend Program, both off a bit from the SPY returns and about the same as the Dow Index. Futures are still searching for a trend, but slowly recovering. On-again, off-again tariffs make that difficult. Gold seems to be the only consistent market.
Major Equity ETFs
The volatility is obvious in the November chart, with only the small caps (IWM) fully recovering. While the SPY and QQQ remain at the top, as a chartist, it is no longer clear if December will make a new high. After a good year, some of the institutiona; firms are likely to bail out before the end of the year.
Our “Close-Up” report this month looks at the stocks that tend to rally in December. However, this year it’s not clear. Only a few stocks are likely to return profits.
CLOSE-UP: This Year, Christmas is Different
Retail sales, posted on 11/25 showed only 0.2% versus an estimate of 0.4%. But then that was in the middle of the government closing. Is that a surprise? It still poses the question of whether buyers are pulling back or spending now that they have a paycheck. I had a theory that not having a paycheck would let furloughed workers save money, which they could then spend on the holidays. But in the scheme of shoppers, how big a percentage is that?
It’s going to be difficult to figure out what will happen in December. Yes, some of the patterns will still match the normal seasonal trends, but it could be at a lower level. That would be my guess. Shoppers will be out there, looking for better prices. Early reports show that buying was strong on Black Friday, shoppers looking for early deals. But there is only so much money available, so that is likely to reduce shopping in mid-December.
Think of what has happened:
- Government employees were without a paycheck for 40 days.
- Tariffs have increased costs.
- A steady increase in wages has locked-in inflation
- Medical insurance (for at least Medicaid) has risen dramatically
- Immigrants (legal or otherwise) are in hiding
- There is growing concern about the future
While there is no credible data yet, overall price increases for Christmas shopping are estimated at up 8%. That may not be enough to scale back the wealthy, but less fortunate earners are most likely to scale back and shop in discounted stores. (Well, that would have happened anyway!)
On the other hand, Federal workers who were “furloughed” might have spent less during those 40 days and now have their paychecks to spend.
There is more uncertainty coming in January when the current negotiated budget gets another try at reducing the Medicaid cuts. Are shoppers going to ignore what might happen or are they going to reign in their shopping? One never knows. But Black Friday and the Thanksgiving weekend might be a clue. People may want to take advantage of the “sales” rather than waiting for December.
But retail sales and the stock prices are two very different markets. Retail sales are consumer driven, and stocks may be all about AI. We’re more interested in which stocks will rally, and which will not.
Stocks that Normally Rally during the Holidays
NOTE that these charts use data through Nov 24 (before Thanksgiving.) That only leaves three days in November, not much to alter the charts.
In looking at stocks, I’m not sure if hotel bookings, Air B&B, cruises, and airlines, (which are booked in advance) are treated as unearned income until used? Or, are they non-refundable as we have found out in some cases!
I tried to guess what this years charts will look like, but in this case I was very wrong. I got a few correct, such as Walmart and the airlines, but I expected the usual seasonal pattern but with lower returns. One important point that you won’t see in the charts, is that prices tend to turn down just after Christmas Day. I’ve never seen any charts that continued higher from Christmas until New Years.
The following charts show the percentage returns using the yearly average. That’s the monthly returns divided by the same year’s average returns. The scale on the left will be the monthly returns. The charts compare the returns from 2016-2020 with those o 2021-2025. The changes are remarkable!
Retail
How many years have we seen Amazon go higher? A lot. But reports show that Walmart is giving them a run. I wouldn’t count Amazon out just yet, but the two charts below (Chart 1 and 2) show that Walmart is a better investment.
Chart 1. Amazon is still profitable, but is well behind the previous five years.
Chart 2. Walmart seems to be right on target.
Target has also been in the news, but mostly because of restructuring, not for sales. The chart below shows how the stock has fared. In five years it has gone from straight up to straight down.
Chart 3. Target seems to have lost its way.
Unlike Target, Macy’s seems to be doing a better job capturing sales. Not as good as Walmart, but showing an improvement.
Chart 4. Macy’s is showing an improvement.
Best Buy (Chart 5) has also seen its stock go sideways. Better than going down.
Chart 5. Best Buy (BBY) is holding its own, but far from it previous five years.
These retain stocks to do not paint the same picture that we usually see at the end of the year. Shoppers are looking to keep costs down and Walmart is the beneficiary, with Macy’s holding its own. This seems to point to lower overall sales. It’s unlikely that a few retail stores will absorb all the sales that usually encompass all stores.
Resorts and Travel
What shoppers are not spending in stores, they might opt for travel. Reports seem to show long lines at airports. Are they visiting family or just escaping?
Both American Airlines and United Airlines (Charts 6 and 7) both show similar patterns and gains in the last quarter. I’m not sure when passengers book their flights, but I would like to think that it’s unearned income until the passengers actually fly. In which case the charts reflect holiday travel. But then I’ve tried to get money back from the airlines when I’ve cancelled and have had a very difficult time. I’m sure they would like to treat it as “earned” when it’s booked.
Chart 6. American Airlines
Chart 7. United Air Lines
Booking Agencies
Let’s move to booking agencies, Expedia (EXPE) and Air B&B (ABNB). Both try to offer savings for travelers. Perhaps they benefit from our current economy.
Expedia seems to be doing better recently, but mostly in the winter. Note that May through September have lower returns.
Chart 8. Expedia (EXPE).
I was hoping that Air B&B would show good returns, but it seems to be limited to February and March. But then there is only five years of data.
Chart 9. Not much data for Air B&B, although there are good returns in February and March.
Resorts
Any resort analysis needs to start with Disney, although it may be hard to figure out given that it is a gigantic conglomerate. Chart 10 doesn’t tell us much other than trading Disney stock is not a good idea. Again, it’s hard to tell if the cost of going to Disneyland is too expensive, or if the television networks are the problem.
Chart 10. Disney is disappointing.
To show how this reflects the stock prices, Chart 11 shows the last five years of Disney.
Chart 11. Disney prices for past five years. (Source. Yahoo Finance).
While I think of MGM as movies and television, it is mostly a resort business now, with a smaller component of television. Chart 12 shows that the past five years are not as good as the previous five years. It’s becoming a common problem, even with the stock market on new highs.
Chart 12. MGM, like so many other businesses is not doing as well recently.
Much like MGM, Caesar’s stock has been holding its own. Higher in the early part of the year, lower at the end. No indication that the holiday’s help.
Chart 13. Caesar’s Resorts (CZR)
So, What Do We Trade in December?
Of course, we could just go on vacation and close our all of our positions. But then there is always the surprise. For 2025, it looks as though Walmart and Macy’s are the best retailers to own. Airlines are also a possibility.
A Standing Note on Short Sales
Note that the “All Signals” reports show short sales in stocks and ETFs, even though short positions are not executed in the equity portfolios. Our work over the years shows that downturns in the stock market are most often short-lived and it is difficult to capture with a longer-term trend. The upwards bias also works against shorter-term systems unless using futures, which allows leverage. Our decision has been to take only long positions in equities and control the risk by exiting many of the portfolios when there is extreme volatility and/or an indication of a severe downturn.
PORTFOLIO METHODOLOGY IN BRIEF
Both equity and futures programs use the same basic portfolio technology. They all exploit the persistence of performance, that is, they seek those markets with good long-term and short-term returns on the specific system, rank them, then choose the best, subject to liquidity, an existing current signal, with limitations on how many can be chosen from each sector. If there are not enough stocks or futures markets that satisfy all the conditions, then the portfolio holds fewer assets. In general, these portfolios are high beta, showing higher returns and higher risk, but have had a history of consistently outperforming the broad market index in all traditional measures.
PERFORMANCE BY GROUP
NOTE that the charts show below represent performance “tracking,” that is, the oldest results since are simulated but the returns from 2013 are the systematic daily performance added day by day. Any changes to the strategies do not affect the past performance, unless noted. The system assumes 100% investment and stocks are executed on the open, futures on the close of the trading day following the signals. From time to time we make logic changes to the strategies and show how the new model performs.
Groups DE1 and WE1: Daily and Weekly Trend Program for Stocks, including Income Focus, DowHedge, Sector Rotation, and the New High-Risk Portfolio
The Trend program seeks long-term directional changes in markets and the portfolios choose stocks that have realized profitable performance over many years combined with good short-term returns. It will hold fewer stocks when they do not meet our condition and exit the entire portfolio when there is extreme risk or a significant downturn.
Equity Trend
After two months of gains, the Daily Trend program had marginal, small gains and losses, with both portfolios holding above 11%. Similarly, the Weekly Program gained over 7% this month, putting it just about the same as the daily program. It shows that it’s difficult to predict results.
Income Focus and Sector Rotation
Small losses in both the daily and weekly Income Focus portfolios. The Daily program continues to show a loss for the year, while the Weekly program has a marginal gain. Predicting interest rates has everyone stumped. Lower rates by a quarter, hold steady, or even raise rates (not likely). While employment numbers are weak, they are no bad enough to offset impending inflation. We expect the Fed to lower rates again, although ¼ point doesn’t mean much.
Weekly Sector Rotation
The Sector Rotation program has been disappointing lately, jumping between Energy and Consumer Staples, while holding Financials successfully. Although it gained 1.5% in November, it remains down 5% for the year.
DowHedge Programs
The Daily DowHedge gained a small amount to put it higher by 21% for the year, ahead of the index DIA, which is up 14%. The Weekly DowHedge also gained but is lagging quite a bit. The volatility of the market prefers the system to react faster.
High-Risk Portfolios
One month the market is down on semiconductors and artificial intelligence, then it is all-in for it. I would say “fickle” is the right word. This month the 5-stock program gained over 6% and the 10-stock program over 2%. That leave both of them up over 20% for the year. One never knows.
Group DE2: Divergence Program for Stocks
The Divergence program looks for patterns where price and momentum diverge, then takes a position in anticipation of the pattern resolving itself in a predictable direction, often the way prices had moved before the period of uncertainty.
Fractional gains and losses leaves this program up by 24% and 19% for the smaller and larger portfolio.
Group DE3: Timing Program for Stocks
The Timing program is a relative-value arbitrage, taking advantage of undervalued stocks relative to its index. It first finds the index that correlates best with a stock, then waits for an oversold indicator within an upwards trend. It exits when the stock price normalizes relative to the index, or the trend turns down. These portfolios are long-only because the upwards bias in stocks and that they are most often used in retirement accounts.
Small losses are a disappointment for the Timing program, but there is still another month to go. The chart below looks good, with a reasonably smally drawdown and gains this year of 13% and 7%.
Futures Programs
Groups DF1: Daily Trend Programs for Futures
Futures allow both high leverage and true diversification. The larger portfolios, such as $1million, are diversified into both commodities and world index and interest rate markets, in addition to foreign exchange. Its performance is not expected to track the U.S. stock market and is a hedge in every sense because it is uncorrelated. As the portfolio becomes more diversified its returns are more stable.
The leverage available in futures markets allows us to manage the risk in the portfolio, something not possible to the same degree with stocks. This portfolio targets 14% volatility. Investors interested in lower leverage can simply scale down all positions equally in proportion to their volatility preference. Note that these portfolios do not trade Asian futures, which we believe are more difficult for U.S. investors to execute. The “US 250K” portfolio trades only U.S. futures.
More gains of 1% to 4% put most of the portfolios in the black. Trends have been scarce and gold can’t support the entire portfolio. The dollar has been marginally weak. Together they have helped the futures portfolio recover.
Group DF2: Divergence Portfolio for Futures
The pick of the litter seems to be the 500K account, which gained 4%. The 250K portfolio was down slightly while the 1M was up slightly. One must never give up hope!
Blogs and Recent Publications
Perry’s books are all available on Amazon or through our website, www.kaufmansignals.com.
October 2025
An article in Technical Analysis of Stocks & Commodities (the November issue) on “Low-Priced Stocks: A Golden Opportunity or an Unreasonable Risk.” You can take a guess or read the article!
As mentioned in the Close-Up, this was a follow-up on the article published in Seeking Alpha on October 25th, “How To Hedge the U.S. Dollar: Gold, Bitcoin, or Whatever?” This version included some portfolio allocations, which should help.
September 2025
No articles in September, although Perry has committed to being the Keynote Speaker at the Society of Technical Analysts (STA) when it hosts the IFTA conference in October 2026 (not this year!)
August 2025
The September issue of Technical Analysis of Stocks & Commodities has Perry’s article “Using the Elusive Volume Confirmation.” While volume has been an important component of price movement, Perry takes a look at how useful it has been.
July 2025
This month (the August issue) there is an article on “Explaining FX Carry (In Detail).” The Carry program has had years of profits followed by years of losses, yet it is a very important part of institutional trading. This article shows how it is actually done.
Perry has been asked to be the Keynote speaker at the IFTA Conference in London in 2026 (not this year!). Of course he will accept. Plan to be there!
June 2025
Yes, another article! “There is Money To Be Made On The Weekends – But You Need to Know The Market,” appeared in the June issue of Technical Analysis of Stocks & Commodities.
Perry gave a Webinar to “Trading Heads” in Mumbai, India on June 5 at 9:30 AM New York time. Discussed “Not the Usual Diversification.” With any luck, it was taped.
May 2025
You’ll find Perry’s article “Trading the Channel” more interesting than usual. Published in the May issue of Technical Analysis of Stocks & Commodities, it looks at various ways of construction a channel, and one very profitable one.
Perry also addressed a Spanish class where they are building algorithmic strategies. Called ROBOTRADER, it in ETSIT-UPM (Escuela Técnica Superior Ingenieros Telecomunicación- Universidad Politécnica Madrid). The presentation is about Diversfication (in English) and available on youtube.
April 2025
Perry did a studio interview with Jeff Baccaccio (“Rfactory”) in London in March. It is a fine production and a good interview. He has put it on youtube. I hope you enjoy it.
YouTube: https://youtu.be/jmR359jHYBQ?si=IHQ5bVLijGFM19qF
Another article in Technical Analysis of Stocks & Commodities for April, “Do Stops Really Work?” The conclusion even fooled Perry.
March 2025
Perry looks at an old standard in “Revisiting the 3-Day Trade,” which appeared in Technical Analysis of Stocks & Commodities in the March issue.
February 2025
Another article, “Chasing the Market” appeared in the February issue of Technical Analysis of Stocks & Commodities. It answers the question, “Can you make money entering the market after a big move?”
Perry enjoyed the “Fireside Chat” at the Society of Technical Analysts (STA) in London on Tuesday, February 11. It should be available for viewing on their website. He also taped another interview and we’ll let you know how to see it when it’s released.
He also posted “If you think the market will tank, here’s a plan” on SeekingAlpha. It has received lots of view and good comments, although it is advising deleveraging.
December 2024
“Overlooked Strategy Rules” appeared in the December issue of Technical Analysis of Stocks & Commodities. We tend to overlook certain rules that can make a big difference to results. This article looks at scaling in and scaling out of a position, delayed entries, correlations, and other simple but important rules.
Older Items of Interest
Perry did a studio interview with Jeff Baccaccio (“Rfactory”) in London in March 2025. It is a fine production and a good interview. He has put it on youtube. I hope you enjoy it.
YouTube: https://youtu.be/jmR359jHYBQ?si=IHQ5bVLijGFM19qF
Perry was interviewed on June 27, 2024 by Simon Mansell and Richard Brennan at QuantiveAlpha (Queensland, Australia), a website heavy into technical trading. It appears on their website.
On April 18th, 2023, Perry gave a webinar to the Society of Technical Analysts (London) on how to develop and test a successful trading system. Check their website for more details, https://www.technicalanalysts.com..
Perry’s webinar on risk, given to the U.K. Society of Technical Analysts, can be seen using the following link: https://vimeo.com/708691362/04c8fb70ea
For older articles please scan the websites for Technical Analysis of Stocks & Commodities, Modern Trader, Seeking Alpha, ProActive Advisor Magazine, and Forbes. You will also find recorded presentations given by Mr. Kaufman at BetterSystemTrader.com, TalkingTrading.com, FXCM.com, systemtrade.pl, the website for Alex Gerchik, Michael Covel’s website, TrendFollowing.com, and Talking Trading.com.
You will also find up to six months of back copies of our “Close-Up” reports on our website, www.kaufmansignals.com. You can address any questions to perry@kaufmansignalsdaily.com.
© November 2025, Etna Publishing, LLC. All Rights Reserved.