Bonds are Riskier than Stocks...for now

Bonds are Riskier than Stocks...for now

Posted on June 22, 2015

Weekly Update


Market State 1 (2 trading days) Long term: Bullish - Short term: Bullish. The market is at the upper end of its trading range (extended). S&P 500 was up 0.75% for the week.

The Canterbury Volatility Index (CVI): CVI 50 - Volatility has remained low and stable which is reflective of an efficient market environment.

The CVI is calculated on the S&P 500 index. CVI 75 or lower is considered to be reflective of a rational/low risk market environment for global equities in general. The current CVI 50 is just 1 point above the low volatility for the year.

The Overbought/Oversold indicator is at 71% Overbought (short term neutral/Bearish).

A 95% to 100% reading would be considered to be an “extreme” level. 95% to 100% overbought would be short term Bearish while 95% to 100% Oversold is Bullish.

Market Comment:

Most major market indexes and most stocks are locked in a trading range. The Healthcare Sector remains at the top of the Portfolio Thermostat’s Volatility Weighted Relative Strength ranking. Consumer Discretionary is ranked 2nd among the S&P 500’s 9 Sectors. The Utilities and Energy Sectors continue to be the worst two ranked Sectors.

The Small Cap Growth index is outperforming most other major market indexes. The Small Cap Growth ETF (FYC) is in Security State 1 (most Bullish Security State). It broke out of a four month trading and put in new highs on Thursday and Friday.

In battle, the lower ranked “troops” at the front leading the charge. The generals follow behind. By “troops” I mean the mid and smaller-cap stocks should be performing better than the big-cap generals. This is what is happening now as the small capitalized (cap) stock indexes are (out in front) of the large cap stocks. Meaning that they are performing better than the large-cap generals. The rally in small caps is also a sign that the breadth of the market remains strong.

The long term Treasury bond (TLT) was up just a fraction for the week. TLT is in the most Bearish market environment, Security State 12.

Bottom Line:

Trading ranges don’t last forever. They typically end when most investors least expect.

Canterbury Investment Management: Tom Hardin

More About Tom Hardin

As Chief Investment Officer, Tom has more than 30 years of experience in the investment management industry and has a broad breadth of knowledge. He is known as an innovator, educator and has been revolutionary in the advancements of portfolio and risk management.

Every effort was used to provide accurate data and mathematical calculations to provide, what we believe to be, accurate results. Canterbury Investment Management, LLC, and its principal owners, make no guarantee of completeness or accuracy of data or calculations as well as conclusions of any statistical data or information contained in the simulation illustrated on this page. Past results or performance is in no way a guarantee of future results.