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[With the current global disruption in the markets, there is a growing call for enhanced market intelligence and heightened attention to price trend analysis. Advanced analytics can help investment managers navigate an increasingly volatile marketplace by helping them identify and validate early any developing negative trend reversals to avoid and position themselves for positive trend support before they escalate.
To explore this further, we reached out to Rocco Pellegrinelli, CEO of Trendrating – an example of an advanced, AI-driven, price-trend analytics research platform that has developed a methodology to assess price trends (tracking 16,000 stocks, global indices, and a wide cross-section of equity sectors) and provide early alerts about potential bull and bear phases. For portfolios holding stocks, we have seen how bear trend losses can be sudden and significant. Effective “trend risk control” across all holdings is now more critical than ever. We asked him questions to learn about his price trend discovery research platform, his perspectives and calls on the current marketplace, and the support he offers professional investment and asset managers.]
Hortz: Was your trend capture research model issuing multiple warnings of growing bear trends and a possible top for the U.S. market?
Pellegrinelli: Yes. Our AI multi-factor, price-trend research model signaled a growing number of negative trend reversals on key indices, ETFs, and a number of popular stocks throughout February and March which had been adding to the deterioration we were observing in the percentage of rising stocks vs. falling stocks.
In the large cap universe back in December 2024, our model identified 76% of the stocks in a bull trend and 24% in a bear phase. As of March 30th, the large-cap ratio was 55% bull vs 45% bear trends. For the mid-cap universe, the trend ratios moved by March 30th from 72% bull vs 28% bull trends to 40% bull vs. 60% bear trends.
Our research model issued a “D” rating (highest bear trend risk) calling for a strong reversal or top of the following U.S. indices:
S&P 500 – March 5, 2025
NASDAQ – March 3, 2025
Russell 3000 – March 5, 2025
On March 14, 2025, our rating system called a wide cross-section of index ETFs with “D” ratings (highest bear trend risks) calling for a strong reversal of these indices which we saw as an early call for the top of the markets.
This has been well documented through our Linked-In posts and market reports we published and the mail campaigns we distributed.
Hortz: How can you identify and validate a negative trend reversal early enough to avoid significant losses?
Pellegrinelli: Trendrating’s research methodology is designed to identify price trends with a time horizon of 6-to-18 months. It uses a pattern recognition methodology – using different indicators that were carefully selected and validated over the years from a list of 200+ parameters – analyzing price and volume data in order to discover the actual money flow and unseen undercurrents developing under their current prices. Our AI research model is designed to capture the key trend reversals, measuring the buying vs. the selling pressures, the key element governing trends.
We introduced a way to isolate, validate, and rate price trends. Our multi-factor trend discovery model issues four grade ratings to assess the actual direction and quality of trends. “A” and” B” ratings confirm a bull trend and “C” and “D” ratings signal a bear trend.
Hortz: How does your identification of the correction that followed seem to compare to other methodologies, experts opinions, and risk control tools. What do you feel drove your results versus others?
Pellegrinelli: Our mission is offering a modern, more effective “ trend intelligence “ framework compared to other conventional methodologies.
Momentum works, for instance, as long as a trend continues, but it is late at capturing trend reversals, as it may require a few months of price action to spot the trend. Conventional technical analysis tools have value, but every indicator can produce erratic signals across different cycles. Our model is specifically designed to severely limit these weaknesses. The result is an accuracy rate of 76-to-79% of trend reversals in any market, well above other approaches.
Hortz: What should investors expect now?
Pellegrinelli: More volatility, ups and downs in the indices that today are already down in the double digits. We can expect the weakness to spread across more stocks, even in some securities that, so far, have not fallen. Therefore, closely monitoring for any other negative trend reversals that can emerge across your holdings in investment portfolios is essential to limit the damage. The deterioration generates new negative trends across stocks every day. For example, over the last five days our model issued 96 alerts of trend downgrades on US large and mid-cap stocks.
Hortz: Who are the users of your research platform and how do they use it?
Pellegrinelli: Our clients are professional managers and advisors that realize the importance of respecting and exploiting price trends. They use our platform as a complement to the market intelligence they have, adding an extra layer of pragmatic, logical risk control. They like to check the two key boxes: strong fundamentals and a confirmed positive trend, picking only good companies with “a strong wind to their backs” of positive price trends. They also want to better control risks and they realize that dismissing negative price trends is myopic and unsafe.
Hortz: How do you work with prospective advisor investment and asset managers?
Pellegrinelli: We are set up to be a performance management partner for investment and asset managers. We currently offer managers extended free trials to demonstrate and prove with facts how our advanced AI price trend analytics and alpha discovery research platform can provide enhanced market intelligence, strengthen risk management, and improve investment performance for any manager using any investment methodology on an ongoing basis. We openly invite managers to take a free look on how you can strategically expand your research tools for this challenging and volatile market environment!
This article was originally published here and is republished on Wealthtender with permission.
About the Author
Bill Hortz
Founder Institute for Innovation Development
Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.
