Markets Shift and So Should Your Portfolio

Markets Shift and So Should Your Portfolio

Posted on April 21, 2014

Canterbury Portfolio Thermostat – Weekly Update 04/21/2014

Market State 2 (26 trading days) - Long-term: Bullish; Short-term: Neutral

Canterbury Volatility Index is at CVI = 63: The CVI remained unchanged for the week. The market’s volatility remains in the Portfolio Thermostat’s low risk area. A reading below CVI 75 is considered to be a "safe zone.”

Low risk does not have to mean low returns. The Portfolio Thermostat focuses on adjusting its holding among a diverse group of about 130 Exchange Traded Funds (ETFs). Low and consistent portfolio volatility allows the securities to move in concert with the ever-changing market environments.

Our overbought/oversold indicator began the week at 91% oversold (short term Bullish). The S&P 500 finished the short week up 2.7%. This indicator is now neutral at 47% oversold.

Market Comment:
Last week was a good one for US stocks. The Utilities Sector remained at the top of the Portfolio Thermostat’s volatility weighted relative strength ranking. The Energy Sector was the overall strongest last week. The S&P 500 remains in a trading range.

The NASDAQ’s relative strength continues to lag behind the S&P 500 which means that Value is still better than Growth. The NASDAQ has been in a very clear short term down trend since early March. The NASDAQ is at a critical support level at 4000. A break much below this support will be another confirmation of the rotation away from Growth to Value stocks.

Bottom Line:
We remain in a medium and long term Bull Market. The shift from Growth to Value occurred very quickly. Those who are slow to react most likely either missed part of the rally in Growth during the 4th quarter or are not performing well in 2014. Most of the weakest Sectors late last year have been the strongest this year and vice versa.

There is no reason to believe that we will be seeing anything but a continued shift back and forth between Bullish Market States 1 and 2. That said it is important to maintain a portfolio with ETFs with the Bull market characteristics we have discussed in past Weekly Updates.

Canterbury Investment Management: Tom Hardin

More About Tom Hardin

As Chief Investment Officer, Tom Hardin, Chartered Market Technician (CMT), makes all the final decisions on all investment and portfolio management decisions for Canterbury Investment Management. Tom has more than 30 years experience in the investment management industry and has broad breadth of knowledge. He is known as an innovator, educator and been revolutionary in the advancements in 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.