Market Breadth Remains Strong

Market Breadth Remains Strong

Posted on April 13, 2015

Canterbury Portfolio Thermostat™
Weekly Update
4/13/2015

The Portfolio Thermostat identifies 12 different market environments called “Market States.” Each Market State has its own unique characteristics and tendencies.

 

The Macro- Market States are used to provide a “big picture” view of the characteristics of the current equity markets. The S&P 500 is commonly referred to as “the market.” There are 5 Bullish (rational – low volatility) Market States; 4 Bearish (volatile and/or increasing volatility) Market States; 3 Transitional Market States (indicating caution).

 

Macro - Market State™ (calculated on the S&P 500)

Market State 2 (MS 2 in place over the last 13 trading days): Long-term (Bullish) Short-term (Neutral). The S&P 500, Dow, NASDAQ and Russell 2000 finished the week up 1.74%, 1.68%, 2.24% and 0.74% respectively. GE carried the large cap indexes with an explosive 13.3% move for the week.

 

Canterbury Volatility Index (CVI): CVI 62 - The CVI volatility decreased another 4 points last week (declining volatility). A CVI of 75 or lower is considered to be a “save zone.” The Low and decreasing volatility is reflective of a stable and efficient environment; a primary characteristic of a bull market.

 

The Overbought/Oversold indicator finished the week at 82% Overbought (the Bearish side of Neutral).  A reading of 90% or higher would be short term Bearish and 95% or higher would be consider an extreme level. Please keep in mind that this indicator is optimized for the short term (typically about one to three weeks).

 

Market Comment: The breadth of the global equity markets’ continues to broaden. The “stocks only” advance decline line is near a new high.  Mid and small capitalized growth stock indexes continue to outperform the large cap S&P 500. The Large Cap international EAFE index has moved past the S&P 500 on our Volatility Weighted Strength report.

Treasury bonds were down slightly last week and have been locked in a tight trading range over the last couple months. The CRB Commodity Index, represents 19 diverse commodities. The ETF symbol (DBC) remains near its lowest level since the 2006 inception date of the ETF. Commodities have been weak because of the strong dollar. The two are typically negatively correlated. US Dollar just issued a new short term Buy signal last Friday. So it doesn’t appear that commodities will be improving any time soon.

 

The Canterbury Portfolio Thermostat had no rotations (buys or sells) in the portfolio last week.

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.