To make Wealthtender free for readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a conflict of interest when we favor their promotion over others. Read our editorial policy and terms of service to learn more. Wealthtender is not a client of these financial services providers.
➡️ Find a Local Advisor | 🎯 Find a Specialist Advisor
[With growing uncertainty, markets are under pressure rapidly rotating through new opportunities and risks that seemingly are emerging almost weekly. This market dynamic of accelerating price trends is alternatingly creating strong positive tailwinds and dangerous rip currents that can pull down a manager’s performance. Identifying and validating price trend reversals – both positive and negative – across stocks are becoming essential for safeguarding portfolios and outperforming the market over time. These shifting rising and falling waves of activity on price trends may need more attention and precise market intelligence to quickly validate and capture.
To further explore this topic, we reached out to Institute Founding member Rocco Pellegrinelli, CEO of Trendrating – a Swiss-based company providing advanced alpha discovery and price trend analytic research solutions. He specifically designed his Trendrating research platform with modern AI technology and enhanced market intelligence capabilities that, in a few clicks, can be quickly added as a research and decision-making overlay to any investment manager’s current investment processes. He has dedicated his firm to being a performance management partner for investment managers to help them beat benchmarks and passive fund performance on an ongoing basis.
Voicing his particular concerns about the dangers he sees in the current market environment, Mr. Pellegrinelli makes his case in our discussion for the need for arming and empowering managers with a sound market intelligence discovery process to unveil critical investment insights for a measurable impact on performance.]
Hortz: What do you see as the dangers in the current stock market cycle?
Pellegrinelli: The stock market has been entering a more challenging economic and geopolitical scenario driven by tariff threats, impending trade wars, and a growing global sense of uncertainty. This is being evidenced by the increasing dispersion of performance across stocks.
We use our multi-factor model to analyze medium-term price trends and assign a rating , based on the true direction and quality of trends, measuring the actual buying vs. the selling pressures behind stocks and sectors which are the key elements governing trends. A pragmatic assessment and respect for actual trends is part of a wise and safe investment decision process.
In the US market, we are observing through our price trend research platform a growing deterioration in the percentage of rising stocks vs. falling stocks. Here are some interesting statistics capturing this evolution of the market’s breadth:
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 today in mid-March 2025, the ratio is 52% vs 48% .
For the mid-cap universe, the trend ratios moved from 72% vs. 28% to 46% vs. 54%.
Hortz: What do you see as the biggest challenges in navigating this market?
Pellegrinelli: The quality of research and information makes the difference. Portfolio managers need and deserve data and tools to provide the market intelligence whose impact on alpha is real. The quality of the stock selection process makes the difference.
The market unfortunately offers a large quantity of data, research, and tools producing information whose actual value in generating alpha is unclear, unproven, and difficult to test and validate. Lacking the ability to check and validate true value, investors can use such information flow on the basis of assumptions and habits.
Our Trendrating research platform is changing all this. Our “ performance management” technology offers a breakthrough of market intelligence and factual insights. We enable investors to discover what works and what does not with a platform supporting enlightening fact-finding and rigorous validation via a multi-year testing. The impact of this enabled discovery technique on investment performance is fully measurable and trackable on our system .
In our experience the outperforming stocks share two key elements – carefully selected fundamentals that are being acknowledged by the market and confirmation of a positive price trend in action. The combination of the two factors can support a superior stock selection process.
Hortz: What is your proposition and recommendation to professional investors?
Pellegrinelli: Bottom line, it is all about fact-finding. Unveil which fundamental parameters actually deliver alpha. Explore different combinations of selection rules combining any criteria from fundamental, quantitative, or technical analytics. Calculate and Track as many strategies as you like and select the best. Discover the most productive mix of rules and design effective, winning strategies. Validate with rigorous historical evidence across the years. This will help you maximize your opportunities to deliver superior performance on a consistent ongoing basis .
And in order to strengthen risk control we invented a methodology to rate medium-term price trends on individual stocks. Our AI-driven trend discovery model issues four grade ratings to assess the actual direction and quality of trends validating A and B ratings confirm a bull trend and C and D ratings signal a bear trend. The model is designed to assess the true direction and quality of trends, measuring the buying vs. the selling pressure, the key element governing trends and revealing the emerging tailwinds and dangerous rip tides lurking beneath the surface of the market.
A pragmatic assessment and respect for actual trends is part of a wise and safe investment decision process.
Hortz: What are the biggest opportunities you see for active investors ?
Pellegrinelli: The market has turned more selective and this process may continue for some time. Active managers have the opportunity to profit from the growing performance dispersion across stocks and easily beat the benchmarks.
Having an investment portfolio with exposure to rising stocks that is larger than the exposure of indices can easily deliver superior returns as the performance of a portfolio is just the combination of the individual trends of the holdings .
This is where better information designed specifically to capture emerging tailwinds and avoid lurking rip tides in price trends makes the difference. Active investors today have the opportunity to access advanced analytics and leading-edge technology that offer the enhanced information that they deserve.
Hortz: Can you recap your best advice to active managers at this juncture in the market?
Pellegrinelli: It is advisable to save time and filter out the noise that is produced by irrelevant data and tools whose real contribution to investment performance is questionable and cannot be validated. On the other hand, the right research tools can open a whole world of precious knowledge:
- Analyze and compare the true value of any selection parameter, from fundamental, quantitative and trend metrics.
- Explore any combination of parameters, as checking more boxes can lead to a better process.
- Discover the winning mix to build superior strategies and model portfolios.
- Validate the results with hard evidence from rigorous tests with historical substance.
- Document with full transparency the rule-based investment process.
The benefits can be several including enhanced performance, improved risk control, better compliance, differentiating proposition for marketing, and portfolio management time savings. Thanks to innovative research platforms, active managers can get information that is not available in conventional research and services that can exploit the dynamic performance dispersion across stocks. The opportunity is then to easily beat the benchmarks on an ongoing basis and gain market share from the passive products providers.
Trendrating, as a performance management partner for investment managers, would also be happy to offer managers extended free trials to demonstrate and prove with facts how our 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.
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.
