To The Moon

$S&P 500(.SPX)$ $iShares 20+ Year Treasury Bond ETF(TLT)$ $iShares 7-10 Year Treasury Bond ETF(IEF)$ I’m always fascinated by strategies that combine simplicity with powerful historical results. The Zeberg-Salomon Protocol is one of those rare frameworks. It’s not some complex quant model or gut-feel approach; it’s a rules-based system built around one core insight: the economy moves in cycles, and markets respond in predictable patterns.

The premise is simple:

• When the business cycle bottoms: typically when growth is accelerating from a recessionary trough, you go long the S&P 500. Stocks tend to outperform sharply in early to mid expansions as earnings recover and risk appetite surges.

• When the business cycle rolls over: growth slows, leading indicators turn down, and recession risks rise, you rotate into long-duration Treasuries (like TLT). In these periods, bond prices often rally as interest rates fall and investors seek safety.

I am not exaggerating when I say the historical results are eye-opening. Since 1975, following these switches would have turned $10,000 into roughly $4.27 million, compared to $590,000 for buy-and-hold S&P 500 over the same period (excluding dividends). That is a staggering difference in compounded returns.

🕰 How It Works

The Zeberg-Salomon Protocol isn’t based on vague hunches. It uses macro indicators such as the Leading Economic Index (LEI), Purchasing Managers’ Index (PMI), yield curve slopes, and other cyclical data to identify two key inflection points:

1. The moment the business cycle is transitioning from contraction to expansion (stock buy signal).

2. The moment the cycle is peaking and starting to slow (bond buy signal).

Historically, these cycle phases have been relatively clear in the data:

• Cycle bottoms often occur when unemployment is high but stabilizing, LEI is turning up, and PMIs are climbing back above 50.

• Cycle rollovers tend to show up as LEI declines for several months, PMIs dip toward or below 50, and the yield curve flattens or inverts.

🧭 Macro Dashboard: Where We Are Now

I’m seeing a textbook late-cycle setup right now:

• LEI fell 0.3% in June, marking its sixth drop in seven months and flashing a third consecutive recession warning. Only 40% of LEI components are advancing, which is historically bearish for equities.

• PMI readings are soft. Manufacturing is at 48.0 (contracting for the fifth month), services are barely expanding at 50.1, and Prices Paid have surged to the highest since 2022.

• Yield Curve (10Y-3M) remains inverted, a signal that has preceded every U.S. recession since the late 1980s.

If you were running the Zeberg-Salomon Protocol today, the macro dashboard would be leaning heavily toward a defensive, duration-heavy stance; long TLT over S&P 500.

📈 Technical Lens

I am watching TLT closely. On the daily chart, price is basing after a prolonged downtrend, with resistance tests hinting at a possible breakout. On the weekly chart, multi-year selling pressure appears to be exhausting, opening the door for a sustained move higher if bond demand accelerates.

On the equity side, the S&P 500 long-term chart shows that prior “out of SP500” moments in this framework: 2000, 2007, 2020, would have helped sidestep some of the largest drawdowns of the past 50 years.

🔍 Why This Matters

I’m not guessing here; this is about probabilities stacked in your favor. The Zeberg-Salomon Protocol doesn’t need you to predict the exact top or bottom. It’s about catching the fat part of the move in each asset class while avoiding the worst drawdowns.

Historically, long-duration bonds have provided powerful countertrend returns during equity bear markets. The key is that this framework keeps you from holding stocks through the teeth of a recession and instead has you riding bond rallies fueled by falling yields.

🚀 The Takeaway

I am a firm believer that frameworks like this can help traders and investors filter out noise and anchor their decisions in data, not emotion. The current macro setup is exactly the kind of environment where the Zeberg-Salomon Protocol shines; a late-cycle slowdown where bonds tend to outperform and equities often struggle.

The challenge, as always, is execution. You have to commit to the signals and avoid second-guessing. That’s easier said than done, but history shows the discipline pays off.

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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