STRATEGY UPDATE | JULY 28, 2026

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Trading System Signals and Portfolio Update for July 28, 2026

Why we are shifting our daily focus from the 25 System Portfolio to the 18 System Portfolio NQ—and what the current drawdowns may be signaling.

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A Difficult, High-Noise Market Environment

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The markets continue to churn around geopolitical developments, producing sharp intraday moves that frequently stall or reverse. July has been especially difficult for systematic day trading, with an acceleration in short-term noise and fewer sustained follow-through moves.

The most challenging characteristic of the current market is the lack of a reliable “second act.” After an initial move, the market often transitions into sideways trading or reverses direction instead of extending the trend. This has made it more difficult to add to winning positions or capture the larger directional moves that trend-following strategies are designed to exploit.

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Why We Are Prioritizing the 18 System Portfolio NQ

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Last week, we published our analysis of Portfolio Correlation Studies and Out-of-Sample Analysis . Based on that research, we believe the 18 System Portfolio NQ currently provides the strongest portfolio structure among the setups we track.

When we developed the 25 System Portfolio, we included multiple variations of two of our strongest strategy families: V-Reversal and Gap Continuation. Although these strategies were individually attractive, including several closely related variations created clusters of similar systems within the portfolio.

Our correlation study measures both maximum pairwise correlation and the number of strategy pairs that fall within what we call the “too similar” zone. The 18 System Portfolio NQ produced the strongest overall correlation profile while also generating the highest maximum return-to-drawdown ratio in the comparison.

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Portfolio decision: Based on the correlation analysis and the recent performance of the 25 System Portfolio, we are recommending the 18 System Portfolio NQ as the primary portfolio focus going forward.

V-Reversal Drawdown Analysis

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The V-Reversal strategy with the Accelerated Trailing Stop is currently near its historical maximum drawdown, but it has not exceeded that level and remains within its historical tolerance. The larger concern is that the 25 System Portfolio contains six V-Reversal variations. Because those systems respond to similar market conditions, their drawdowns can overlap and amplify the portfolio-level decline.

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Changes to Daily Portfolio Tracking

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We stopped trading Silver earlier this year because increased volatility and reduced order-book liquidity in Gold and Silver futures were producing more stop-order and market-order rejections than normal.

As a result, we have removed the Silver Portfolio and the 50K Portfolio from daily tracking because both include Gold and Silver strategies. We will also discontinue daily tracking of the 25 System Portfolio and replace it with the 18 System Portfolio NQ.

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Strategy Research and Upcoming Updates

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We are continuing to research ways to improve portfolio construction for the current market environment. This includes evaluating strategy correlation, reducing unnecessary overlap, and developing updated releases for several existing strategies.

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DRAWDOWN ENTRY ALERT

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The Two, Three, and Seven System Portfolios Are in Drawdown Entry Zones

The Two System, Three System, and Seven System Portfolios are currently in drawdown entry alerts. These alerts do not guarantee that a recovery will begin immediately, but they identify periods when the portfolios are trading below prior equity highs and may offer a more favorable entry point relative to their historical performance.

We are watching for the possibility of larger directional moves that could benefit asymmetric “home run” strategies such as Open Range and Gap Continuation, which are included in the Two and Three System Portfolios.

The Seven System Portfolio currently includes two V-Reversal strategies. One possible research improvement would be to reduce strategy overlap and improve its maximum pairwise correlation profile.

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DAILY REPORT

Hypothetical Trading System Signals for July 28, 2026

Results shown are hypothetical and do not represent actual client-account performance.

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Final Perspective

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Drawdowns are never comfortable, but they provide important information about portfolio construction, strategy overlap, and the changing market environment. Our current priority is not simply to add more systems. It is to improve diversification, reduce unnecessary correlation, and concentrate on portfolios with the strongest historical return-to-drawdown characteristics.

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Risk Disclosure: Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Actual results may differ materially from hypothetical results. Futures trading involves substantial risk and is not suitable for all investors. Past performance, whether actual or hypothetical, is not necessarily indicative of future results. Drawdown figures are based on end-of-day calculations and do not reflect intraday drawdowns. Only risk capital should be used for futures trading.