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The 4-3-2-1 Method To Winning
Daily Update on SPY, QQQ, TLT, USO, BTC, COIN, Mag-7, Gold, PLTR
Yimin Xu
June 18, 2025
Hi YXI friends,
Today, we are going to establish a 4-3-2-1 methodology in evaluating the performance potential of the key risk assets in our coverage.
The method combines our analysis from the machine-learning models, technical analysis, valuation, and seasonality to generate an overall score out of 10.
I call this the 4-3-2-1 method due to its weighting assignment to each analysis: 4 points to our ML Signals, 3 points to the technical analysis, 2 points to valuation, and 1 point to the broader equities or Bitcoin seasonality.
Within technical analysis and valuation, we further break down the criteria for awarding individual points according to the asset’s price technicals in the long-term versus short term, as well as valuation versus peers and its own history.
You can dive into the specific details here in the page below, but I will initiate this methodology using SPY today to fully demonstrate how it works.
The scores will be updated daily after each ticker’s launch. This is just a starting point. We will make plenty of tweaks along the way before settling on a robust system we trust.
If you are looking for our Systematic Signals directly, you can find them in our dedicated morning note on SPY, QQQ, BTC, TLT, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA (free), PLTR (free).
Let’s dive in!
Table of Contents
DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
1. SPY’s 4-3-2-1 Score
SPY’s Score on June 18: 6 / 10
Ticker | YXI Signal | Technical | Valuation | Seasonality | Total |
|---|---|---|---|---|---|
SPY | 4 | 2 | 0 | 0 | 6 |
SPY scores a total of 6 points out of the maximum 10 available today.
In the background, our breakdown:
4 points come from our YXI Signal, which suggests it is risk on.
2 points are awarded in Technicals for: 1) bullish medium term price technicals, and 2) bullish short-term price technicals. But I did not award the final point as it is approaching a key resistance zone (more on the chart analysis below).
0 points for Valuation: SPY’s earnings yield (NTM) is on par with the 10-year bond yield, despite its riskier nature. SPY’s P/E is also near a 2-standard deviation from its historical mean.
0 points for Seasonality: SPY’s 10-year seasonality suggests the return in the next 10 days (June 18-28) is negative on average.
I will update this score everyday, but introduce the new score for each risk asset one-day at a time.
Again, please explore further our framework on the web page below.
2. SPY, QQQ, (SPDW)
SPDW is updated every Monday.
SPY still trades in between the 1.236 and 1.382 extension of wave (i). Wave (iii) may not finish until SPY touches the $607. Markets seem to have shrugged off the Middle East conflict, even though WTI Crude still trades at $70+.
I prefer waiting-and-observing here rather than chasing, especially with the FOMC and Triple Witching coming up.
Regarding the 4-3-2-1 score, I awarded 1 point to SPY’s larger degree bullish uptrend since April 7, as I expect a new ATH and a wave (v) to come still.
I also awarded 1 point to the near-term bullish trend, as SPY rises above the 1.236 extension. If SPY starts to turn down substantially from here, it will lose this point.
I did not award the final point as SPY is approaching our $607 wave iii target just under the key resistance trend line.
SPY valuation
At 22.4x P/E (NTM), SPY’s forward earnings yield is comparable to the 10-year bond yield. Given that SPY is a riskier asset, investors should theoretically prefer the 10-year bond for the equivalent returns.
SPY is also trading near its 10-year high P/E ratio.
QQQ has been moving sideways for two weeks. No immediate weakness is observed just yet. However, I am also cautious in chasing it here given the resistance trend line above and the slowing momentum.
We will do QQQ’s 4-3-2-1 score tomorrow, but it’s pretty much the same as SPY currently.
3. FOMC Projections & Rates Futures
FOMC Projections
We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.
FOMC Date | Before Meeting | Post Meeting | Hike/ Cut in % |
|---|---|---|---|
06/11/25 | 4.33 | 4.33 | 0 |
07/30/25 | 4.33 | 4.26 | -0.07 |
09/17/25 | 4.26 | 4.16 | -0.1 |
11/05/25 | 4.16 | 4.01 | -0.15 |
12/17/25 | 4.01 | 3.86 | -0.15 |
01/28/26 | 3.86 | 3.76 | -0.1 |
03/18/26 | 3.76 | 3.66 | -0.1 |
05/06/26 | 3.66 | 3.56 | -0.1 |
06/17/26 | 3.56 | 3.46 | -0.1 |
There is no chance of a rate cut in today’s FOMC.
3-month SOFR Futures Yields
4. Summary Of Today’s YXI Signals
SPY, QQQ, BTC, TLT, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA, PLTR
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