Volatility Remains Low in Current MS 2 Environment

Volatility Remains Low in Current MS 2 Environment

Posted on March 24, 2014

Canterbury Portfolio Thermostat – Weekly Update 03/24/2014

Market State 2 (7 trading days) - Long-term: Bullish; Short-term: Neutral/Bearish

Canterbury Volatility Index is at CVI = 56: The CVI was down 1 point which leaves the market’s volatility pretty much unchanged for the week. A volatility reading below CVI 75 is considered to be a low risk environment. Low volatility is a primary characteristic of a healthy Bull market. Just be aware that there is a higher than normal probability of a one day "isolated” market move in the 1.5% to 2% range, up or down. Such a move, if it occurs, is normal for the current environment.

Overbought/Oversold indicator:
Our overbought/oversold indicator closed Friday at 59% oversold (short term Neural).

Early last week, the stocks-only Advance Decline Line hit another new high: Long-Term - Bullish. The A/D line reflects the breadth of stocks moving up with the market. This is another important characteristic of a long term Bull market.

Market Comment:
The S&P 500 had a good week +1.38% but showed weakness on the close Friday. The market has been in a trading range since the beginning of the year and is only up a fraction. Our CVI volatility remains low. Our medium and long term indicators are Bullish. Value stocks have been outperforming growth stocks which are not a good sign for the very short term. At this point, a short term pullback in the market, on low volatility, would be healthy.

Bottom Line: Bull Markets need a rest from time. Our current holdings all have the Bull market characteristics we want. If the market environment begins to change, the Portfolio Thermostat’s indicators will make the necessary adjustments.

Also, it is good to see Russia (RSX) at the bottom, in last place, on the Daily Report list. Send a message to Putin: You can’t bully the markets!

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.