MARS Strategy

MARS (Macro Adaptive Risk Signal) is a systematic equity timing strategy that determines S&P 500 exposure based on macroeconomic regime indicators. The strategy generates binary signals: either fully invested in SPY or in cash.

The model analyzes macroeconomic data from the Federal Reserve Economic Data (FRED) to assess financial conditions and economic regime. When conditions are favorable, the strategy maintains full equity exposure. During periods of elevated risk, the strategy shifts to cash to preserve capital.

Key advantages include: Crisis Protection through systematic risk reduction, Model inputs using non-revised economic indicators, and Simplicity with only two positions (SPY or Cash).

Walk-Forward Test Active Starting December 9, 2025, this strategy is being tested with market data in a walk-forward framework.

The strategy monitors multiple macroeconomic indicators daily. Each indicator contributes to a composite signal that determines market regime. The methodology is based on established relationships between financial conditions and equity returns documented in academic research.

Signals are generated at market close and positions are adjusted at the next market open when the regime changes. The strategy typically maintains positions for extended periods, resulting in low turnover and minimal transaction costs.

The dashboard displays both backtested and model performance. The vertical line marks December 9, 2025 - the start of the walk-forward test. All data to the left represents historical backtesting (starting 2005); all data to the right represents hypothetical out-of-sample performance.