Rotation From Growth to Value Continues

Rotation From Growth to Value Continues

Posted on April 28, 2014

Canterbury Portfolio Thermostat - Weekly Update – 04/28/14

Market State 2 (31 trading days) - Long-term: Bullish; Short-term: Neutral

Canterbury Volatility Index is at CVI = 60: The CVI was down 3 points for the week showing a slight reduction in volatility. The market’s volatility, as measured by our Canterbury Volatility Index (CVI), continues to remain in our CVI 75 "safe zone.” As long as the CVI remains below 75, then a typical correction should be limited to about the -4% to -8% ranges. The CVI has ranged between 46 and 66 (low and stable) so far during 2014.

Overbought/Oversold indicator:
Our Portfolio Thermostat overbought/oversold indicator closed at 55% overbought (short term Neutral). The previous week was just 2 points different at 53% overbought.

Market Comment:
The S&P 500 was down a little over 1 point for the week. Last week closed with most areas of the market relatively flat. The NASDAQ 100 had a tough day on Friday and its relative strength, compared to the S&P 500, continues to deteriorate. The NASDAQ has continued its short term pattern of lower highs (in price) and lower lows.

The Utilities Sector (XLU) remains in the number 1 slot, in the Global Equities Group, based on our volatility weighted relative strength ranking. The Energy Sector (XLE) holds 2nd position and Consumer Staples (XLP) is number 6 out of 68 ETFs in the Global Equities Group. Can you spell DEFENSIVE? On the other hand, the economically sensitive Consumer Discretionary Sector (XLY) is now ranked 64 out of 68. XLY was ranked 15th out of 68 (down 49 positions) ETFs on 12/31/13.

Today (Monday) the market is opening up early. The NASDAQ is leading the way up. It is typical to get an oversold bounce after a period of underperformance. The tide has turned in favor of the defensive areas of the market. There have been several different confirmations of the shift from Growth to Value. The probabilities are that the current leadership will remain to stay in place for a while unless some low probability event causes another major shift in leadership.

Bottom Line:
The Portfolio Thermostat has made all the ETF rotations necessary to match the current market environment. Our primary objective is to gain the benefit of long term compounded returns by avoiding substantial declines and maintain consistent volatility.

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.