Volatility Remains Low as Market Leadership Shifts

Volatility Remains Low as Market Leadership Shifts

Posted on May 13, 2013

Canterbury Portfolio Thermostat - Weekly Update - 5/13/2013

Market State 1 = Bullish/Rational - Typical (MS 1) risk is -2 to -4%.

Canterbury Volatility Index (CVI) = 59 - The CVI is down 5 points from the high at 64. A declining CVI indicates a reduction in volatility which is positive. A CVI below 75 is typical of a rational/low risk environment.

Weekly Comment:
The market has been led by large-cap dividend stocks during most of the current six month rally. For example, the Dow Dividend ETF, symbol DVY, is up almost 15% this year. We are now beginning to see a healthy rotation in market leadership, which is typical of a strong Bull market.

The growth segments of the market are getting stronger and our NASDAQ weekly relative strength indicator, verses the S&P 500, has moved higher, indicating we are in a “risk on” period. The S&P 1500 advance/decline line put in a new high Friday confirming the wide participation.

The market is a little extended. Our overbought oversold indicator is currently 77% overbought. Actually I would consider a short term pull back to be healthy consolidation of recent gains.

Bottom Line:
The market continues to be Bullish, slow, steady and rational. More of the same is expected until the CVI begins to increase.

Canterbury's Portfolio Thermostat is a comprehensive portfolio management system designed to maintain stable portfolio volatility by adjusting asset allocation and portfolio’s holdings to benefit from the unique characteristics of each market environment.

The Portfolio Thermostat is designed to identify, and then categorize, the various market environments into 12 individual Market States. Market States 1 through 6 represent different market environments during a long term Bull market. Market States 7 through 12 are different stages of a long term Bear market. The Portfolio Thermostat assigns a custom asset allocation created to benefit from the unique characteristics of each 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.