Evidence Based Research

Evidence Based Research

Posted on March 30, 2015

Canterbury Portfolio Thermostat™
Weekly Update 
3/30/2015

Market State 2 (MS 2 in place over the last 4 trading days): Long-term (Bullish) Short-term (Bullish). The S&P 500 declined -2.2% last week and is currently off -2.7% from its March 2nd high. The Russell 2000 was down -2.0% last week. A bull market “pullback” is defined as a -5% decline from the peak value and a “correction” is a -10% decline from the high.

 

The current S&P 500’s -2.7% decline, from the peak, would count as about a half of a normal “pullback.” Bull market “pullbacks” and “corrections” are part of the normal ebb-and-flow process as the market works its way higher.

 

Canterbury Volatility Index (CVI): CVI 66 - The CVI remained stable and actually decreased 1 point for the week (insignificant). Stable volatility is a primary bullish characteristic.

A volatility reading of CVI 75 or lower is considered to be a safe zone (Bullish).

Canterbury Overbought/Oversold indicator finished the week at 85% Oversold (90% reading, or higher, would represent an “extremely oversold environment - Bullish). Last week’s market pullback helped improve this indicator by 8 points from the previous week’s update.

 

Market Commentary:

Market behavior would be easier to understand and manage if bull markets only went up and bear markets always declined. In a perfect world, there would be no wild market whipsaws, no one step backwards for every two steps forward and no worrying about every bull market pullback or correction turning into the next devastating bear. Unfortunately, that is not how markets work.

 

Markets and securities prices are driven by the Law of Supply and Demand. Therefore, pricing will always be variable. For the most part, market value prices will wander in a sideways trading range. In other words, markets spend a great deal of time churning within a 5% or 10% trading range. This “market noise” is just part of the nature of liquid markets and has no meaningful impact on long term returns.

 
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.