A Sleeping Bull Market

A Sleeping Bull Market

Posted on June 03, 2014

Canterbury Portfolio Thermostat - Weekly Update – 06/2/14

Market State 2 (55 trading days) - Long-term: Bullish; Short-term: Neutral/Bullish. The large company indexes continue to hit new highs. Keep in mind that the Dow is just up 141 points year to date and the S&P 500 is up 76 points (up just 27 points for the year through May 15th). Trading ranges have been tight and there have been several shifts in market leadership. Most small cap indexes are down for the year.

A tight trading range means that the probabilities are high that we could see the S&P 500 have one of those "one day outliers,” meaning a one day up or down move in the 2% range.

Canterbury Volatility Index is at CVI = 51: The CVI (volatility) declined 1 point for the week. The volatility is at a very low level which reflects a low risk market environment. The extreme low CVI volatility also shows that the markets have generally been going nowhere.

Market Comment:
Large cap stocks remain the place to be. The S&P 500 was up +1.23% last week and the Dow was up +0.67%. The S&P 500 registered a new all-time high on Friday. Don’t get overly excited because it is only up +3.68%, for the year, through last Friday. The Dow is up +1.18% and the Russell 2000 is down -2.77% year to date.

As I have said many times, markets are counter intuitive. Most market strategists believed that higher interest rates were a given. Who would have thought that the 10 Treasury note would experience a drop in yield to only about 2.5%? Put in perspective, the S&P 500’s dividend yield is 1.92%. In fact, 148 of the S&P 500 stocks have dividend yields greater than the ten-year Treasury.

Bottom Line:
We are in a Bull market, albeit a sleeping bull, but the Portfolio Thermostat’s indicators are reflecting a continuation of the bull market. The Thermostat model’s portfolio is currently holding 14 ETFs of which 11 holdings are rated as Buys and 3 Holds. The Portfolio Thermostat model is programed to maintain holdings with bull market characteristics to match the current Market State environment.

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.