How the model chooses between the three signals
The system generates two probabilities: up probability and down probability. It applies a 60% threshold to decide:
How the signal is assigned from probabilities
Threshold · 60%Each day the model computes two probabilities: up and down. If either crosses 60%, it emits BULL or BEAR. If neither does, the signal is NEUTRAL.
Up probability ≥ 60%
The model sees enough bullish asymmetry. It increases simulated tactical equity exposure.
Neither crosses 60%
No clear asymmetry. The model holds core and raises tactical cash. Not a sideways market prediction.
Down probability ≥ 60%
The model detects bearish asymmetry. It reduces equity and increases bonds and cash.
The 60% threshold is not arbitrary: it is calibrated in walk-forward to maximise OOS Sharpe while avoiding overfitting. The result is that the model defaults to NEUTRAL when in doubt.
Quick comparison of the three signals
Same dimensions, three distinct states. The table summarises what changes between BULL, NEUTRAL and BEAR.
| Dimension | BULL | NEUTRAL | BEAR |
|---|---|---|---|
| Activation threshold | Up prob ≥ 60% | Neither ≥ 60% | Down prob ≥ 60% |
| Equity exposure | High (max tactical) | Medium (core intact) | Low (defensive rotation) |
| Portfolio cash | Minimum | Elevated | Maximum |
| Short position | No | No | No — defensive only |
| VIX Shield active | Only if VIX > 60 | Modulates more often | Can reinforce |
| Historical frequency | ~45–50% | ~30–35% | ~15–20% |
What each signal implies for the simulated portfolio
The three signals map to different simulated portfolio distributions. The model adjusts tactical allocation on top of the strategic base allocation:
BULL: maximum tactical exposure
The simulated portfolio raises the equity share and reduces cash. Guardrails (VIX Shield, SMA200) can modulate position size even on a BULL signal.
NEUTRAL: partial tactical reduction
The strategic core is maintained but the tactical slice is trimmed. More cash, less simulated leverage. No short position.
BEAR: defensive rotation
The model shifts allocation towards bonds, gold and cash. The equity share falls significantly compared to BULL.
Why NEUTRAL does not mean "the market will trade sideways"
This is the most common misreading. NEUTRAL describes the state of the model, not the state of the market. The market can rise 3% or fall 4% during a week flagged as NEUTRAL — the observed drivers (momentum, rates, credit, volatility) simply weren't asymmetric enough to predict it with confidence.
NEUTRAL = "the model has insufficient evidence", not "the market won't move".
How to read a NEUTRAL on the dashboard
On LearnAImarkets, a NEUTRAL signal always comes with three pieces of context worth checking before acting:
Raw probabilities
If the up probability is 55% and the down one 45%, there is a bullish tilt the model does not execute due to the threshold; at 50/50, the model is genuinely indifferent.
Ensemble agreement
Share of sub-models voting the same way. High agreement on NEUTRAL is genuine consensus; low agreement signals internal disagreement worth inspecting.
Dominant drivers
Which blocks carry weight today (technical, macro, risk, volatility). On NEUTRAL you often see BULL and BEAR drivers cancelling each other out.
All three pieces live on the explainability page, alongside the decision map of the day.
Confidence: the data point most often ignored
Each signal comes with a confidence percentage. It is not decorative: it indicates how far from the threshold the emitted signal is.
- BULL at 61% confidence: right at the threshold. One adverse data point may flip the signal the next day.
- BULL at 82% confidence: clear ensemble consensus. Models agree on direction with a wide margin.
- NEUTRAL with high confidence: all sub-models agree there is no asymmetry. Not a data shortage — active consensus.
Confidence and raw probabilities (available on the explainability page) are the essential context for reading any signal rigorously.
When each signal typically appears
The historical signal distribution is not uniform and varies with the market regime:
Clear trends
Sustained BULL in orderly bull markets. Sustained BEAR in structural declines. Little NEUTRAL.
Macro transition
High NEUTRAL frequency. BULL and BEAR drivers cancel each other out. The model prefers statistical patience.
High volatility (elevated VIX)
The VIX Shield modulates the signal. NEUTRAL is more frequent even if probabilities are moderately bullish.
Frequently asked questions
Does a BULL signal guarantee the market will go up?
No. BULL means the model estimates an up probability above 60%, not that the market will certainly rise. Markets are inherently uncertain; the signal describes the model's reading, not a deterministic prediction.
When does the model issue BULL versus NEUTRAL?
The model issues BULL when the up probability exceeds 60% after applying guardrails. If it falls between 50% and 60%, the signal is NEUTRAL even if there is a mild bullish tilt. The threshold exists to filter noise and avoid overtrading.
Is there a difference between BEAR at 61% and BEAR at 80% confidence?
Yes, and it matters. BEAR at 61% is borderline: a small data change may reverse the signal. BEAR at 80% reflects clear ensemble agreement. Confidence must always be read alongside direction.
How long does a signal typically last?
It depends on the regime. In strong trends a signal can persist for weeks. In transitions it can change in days. The model publishes a signal every business day — the full history shows the duration distribution.
Can I compare today's signal to one from a year ago?
Yes. The signal history includes direction, confidence and date, accessible in the Signals section of the dashboard. It lets you see in what macro context the model issued BULL, BEAR or NEUTRAL historically.
Does NEUTRAL mean the market will trade sideways?
No. NEUTRAL describes the state of the model, not the state of the market. The market can move strongly up or down during a NEUTRAL week — the drivers simply aren't asymmetric enough for the model to take a confident direction.
Does a NEUTRAL signal imply selling?
No. NEUTRAL is not BEAR. The model translates NEUTRAL into reduced simulated tactical exposure (more cash, smaller position sizes), not into short positions or going fully out. It describes the system's behaviour, not an instruction to the user.
View the signal history
The dashboard shows the complete BULL / BEAR / NEUTRAL signal history with confidence, drivers and narrative context.
External references
LearnAIMarkets is an educational platform. The information provided does not constitute financial, investment, legal or tax advice. Signals generated by the AI model are for guidance only. Investing carries risk of capital loss. Consult a financial advisor before making investment decisions.
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