The Trump Rally Continues

The Trump Rally Continues

Posted on March 13, 2017
Weekly Update
3/13/2017
Market State 1: Bullish (31 trading days): Bullish/Rational - Market State 1 is the most predictable of the Portfolio Thermostat’s 12 Market States (market environments). The risk, while in MS 1, is typically around -2% to -4% from the most recent market peak.
 
Canterbury Volatility Index (CVI 37) Canterbury’s studies show that the market’s optimal volatility range is from CVI 75 to CVI 50. Such low volatility periods are subject to one day outliers.
 
The following is an excerpt from a recent Canterbury Weekly Update: Periods of extremely low volatility are typically followed by “single day outliers” that can exceed 1.25%. Thus the analogy of squeezing down a spring and then letting it go to release the pressure. Our studies show that the outlier days are more typically down as opposed to up. The current period may have a higher probability of a breakout to the upside.
 
The S&P 500 did experience a one day outlier of +1.4% on March 1st and was followed by a   -1.3% correction over the next six trading days. The pressure from the low volatility “squeeze down” has not been relieved. Expect one or more outliers, exceeding 1.25%, up or down in the days ahead.
 
Market Comment
The S&P 500 continues to be in a low risk bull market, according to the Canterbury Portfolio Thermostat’s Market States. A shift occurred to a Transitional “Bullish” Market State on March 15, 2016. The current confirmed Bullish Market State environment began on April 13, 2016 and continues through today.
 
The Dow and the S&P 500 have been on an absolute roll this year. According to Canterbury’s Volatility Weighted Relative Strength indicator, the Dow is currently ranked 1st and the S&P 500 is ranked 10th versus our universe of over 130 global equity ETFs. Interestingly, the S&P 500’s advance/decline line (number of stocks up vs. number of stocks down) is slightly lower than it was at its January peak. In other words, the two primary U. S. market indexes are giving the impression that the overall markets are stronger than what they actually are.
 
The following are some of the highest “rated” according to their Canterbury Security State and strongest “ranked” according to our Risk Adjusted Relative Strength indicators.
Global Equities
Positive:
  • Aerospace
  • Financials
  • Mid-Cap. Growth Stocks
Negative: 
  • Asia Pacific Small Countries
  • Global REITs
  • Global High Yield Equity
Alternatives to Global Equities
Positive:
  • Copper
  • Preferred Stocks
  • Timber
Negative:
  • Treasury Bonds
  • Emerging Market Debt
  • British Pound
Bottom Line:
The S&P 500 Index is in a Bullish market environment based on Canterbury’s indicators. The risk in most global equity market indexes remains low.


Source: AIQ

 
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.