Market Update

Market Update

Posted on June 15, 2011

Successful investing is about going with the probabilities. We can never be sure what will happen, but we want to go with what will most likely happen. History and probabilities show that trends, for the broad market averages, tend to not last long. When the overall market moves in one direction, for six weeks or more, then probabilities favor a counter trend move. Yesterday’s triple digit advance was the first indication that the current correction should be nearing an end. Today the market has given back most of yesterday’s gains. Can the market keep going down from here? Yes, but the odds do not favor it. The current market is very oversold. Our overbought/oversold indicator is at 97% oversold. Anything over 95 is considered to be a buy. My volatility index’s current reading is only 61. When the Canterbury Volatility Index is below 75, market corrections have typically been limited to around a 5% or 8% correction. We have already had a little over a 6% correction in the S&P 500. The downside should be limited. The advance decline line typically turns down at least 6 months before the end of a Bull market. That has not happened. The medium term outlook remains positive. The long term trend is still up. Until I see the above mentioned indicators turn negative, I will hold a larger than normal percent in stocks.

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.