Canterbury Investment Management Update: Low Volatility is Bullish for the Stock Market

Canterbury Investment Management Update: Low Volatility is Bullish for the Stock Market

Posted on June 29, 2011

Typically, major market declines are preceded by a sharp increase in volatility. Canterbury's proprietary volatility indicator has remained in the low risk level all year. When our indicator is below 75, our testing shows that the probability of a correction of more than -8% (once in a blue moon -10%) is extremely remote. The current reading on the S&P 500 is 63.

In my June 15th blog, I talked about the market being oversold and the total short term correction should be limited to around -8%. The S&P 500 hit its bottom on the 15th (the same day) and registered a total decline of -7.2%. The S&P 500 is up +3% over the last three days,

We could see a little backing and filling short term. That said, now is a good time to be buying the dip. Canterbury will continue to hold a larger than normal percentage in stock at least until our volatility indicator gets above 75.

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.