Market State 1- Bullish (9 days): Historically, Market State 1 has occurred for more trading days than any of the other 12 Market States. Most new highs are registered during Market State 1. As a result of being at or near new highs, the market tends to be a little overextended. Therefore, Market State 1 can be subject to fast short-term corrections of about 2% to 4% that can occur at anytime.
Canterbury Volatility Index (CVI 56): The Canterbury Volatility Index declined another 4 points last week. Volatility continues to be low and decreasing. Low/decreasing CVI is a Bullish characteristic. Volatility at CVI 56 is nearing an extremely low level. A one-day outlier, of 1.5% or more, either up or down is likely when volatility reaches extremely low levels. A one day outlier is typically followed by normal efficient trading and continued low volatility.
Comment: The market remains in a low risk environment. Growth stocks continue to lead value. The advance/decline line is at new highs (bear markets do not start when the A/D is at a new high).
Source: AIQ
Bottom Line: Approximately, 730 companies in the Russell 3000 will report their quarterly earnings this week. Of the 730 stocks, 177 are in the S&P 500 Index; 11 of the 177 are in the Dow Jones Industrial Average. The fact that we are in Market State 1 gives us an indication that the earnings reports should be strong.

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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.