US Stock Market is at the Upper End of its Trading Range

US Stock Market is at the Upper End of its Trading Range

Posted on January 15, 2019
Market State: Transitional - The S&P 500 stock market remains in a transitional market environment. The market is likely to remain in an emotional state over the next few months or more.

Canterbury Volatility Index (CVI)- CVI 121: Volatility is at a high level, which is a characteristic of an inefficient market. We have seen 11 outlier days (+/- 1.5% or more) over the last 24 trading days. To put this into perspective, there were 0 outliers out of the previous 75 trading days, ending on October 10th of last year.
Volatility, as measured by the Canterbury Volatility Index, is high but has begun to decline slightly over the last few days. The stocks only advance/decline line is showing a broad breadth of stocks participating in the rally. In fact, the mid and small cap stocks are up almost twice as much as the S&P 500 year-to-date.
The NASDAQ 100 is starting to outperform the S&P 500 which is a positive indicator. Over the years, the S&P 500’s return is substantially higher when the NASDAQ’s relative strength is stronger. As it stands now, the S&P 500’s trading range is between 2350 and 2650. The market is short-term overbought and is likely to experience a pullback before any meaningful move to the upside. If the market does pullback from here, the Portfolio Thermostat’s combined indicators are assigning a low probability of breaking below the S&P 500’s low, of 2351, on Christmas Eve.

Source: AIQ
Bottom Line:
The Canterbury Portfolio Thermostat captured the gain in the markets coming of the Christmas Eve low. Following the advance, additional shifts to the Portfolio’s ETF holdings were made to complete a stabilization process. Regardless of what the market does from here, the Portfolio Thermostat should remain stable with few outlier days compared to the global equity markets.  
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.