Chris Ciovacco

About the Author Chris Ciovacco

Chris Ciovacco is the founder and CEO of Ciovacco Capital Management (CCM), an independent money management firm serving individual investors nationwide. The thoroughly researched and backtested CCM Market Model answers these important questions: (1) How much should we allocate to risk assets?, (2) How much should we allocate to conservative assets?, (3) What are the most attractive risk assets?, and (4) What are the most attractive conservative assets? Chris is an expert in identifying the best ETFs from a wide variety of asset classes, including stocks, bonds, commodities, and precious metals. The CCM Market Model compares over 130 different ETFs to identify the most attractive risk-reward opportunities. Chris graduated summa cum laude from The Georgia Institute of Technology with a co-operative degree in Industrial and Systems Engineering. Prior to founding Ciovacco Capital Management in 1999, Mr. Ciovacco worked as a Financial Advisor for Morgan Stanley in Atlanta for five years earning a strong reputation for his independent research and high integrity. While at Georgia Tech, he gained valuable experience working as a co-op for IBM (1985-1990). During his time with Morgan Stanley, Chris received extensive training which included extended stays in NYC at the World Trade Center. His areas of expertise include technical analysis and market model development. CCM’s popular weekly technical analysis videos on YouTube have been viewed over 700,000 times. Chris’ years of experience and research led to the creation of the thoroughly backtested CCM Market Model, which serves as the foundation for the management of separate accounts for individuals and businesses.

Market Outlook: What Does A Stock Market Bottom Look Like?

History Helps With Flexibility

Since the S&P 500 recently completed a very rare period of V-bottoms, it is easy to visualize and understand the “rapid bottom and push to new highs” case for stocks. Recency bias tells us we may have pushed other historical examples to the side.

Humans Act In Similar Ways

Since it is important we remain flexible and open to all outcomes, the charts below can help us with the “what if stocks do not bottom for weeks or months” scenarios. The charts below can also help us better identify patterns and candlesticks that may appear during a correction and subsequent bottoming process.

1990 – “U Can’t Touch This”

In 1990, MC Hammer was near the top of the charts. Stocks were on the lower end of the charts, peaking in July and then making a series of lower lows before finding a bottom.

1994 – “All I Wanna Do”

Sheryl Crow reminded us to stop and smell the roses. The stock market smelled nothing like roses, making a low in early April. Equities did not turn up convincingly until mid-May.

1997 – “Staring At The Sun”

U2’s big 1997 hit required respect for your corneas. Stocks also required a “look away” period, dropping significantly between mid-March and mid-April. Several “green days” were mixed in for confusion purposes.

1998 – “Time Of Your Life”

Green Day’s 1998 hit would later be used in the final episode of Seinfeld. Stocks told a story about nothing, correcting in an up and down manner for almost three months.

1999 – “Cowboy”

In 1999, a guy from Detroit said he “wanted to be a Cowboy”, which seemed a bit odd. Stocks were dealing with an odd fear about computers crashing at midnight on December 31. Many countertrend rallies were fully retraced before a final low was made.

2004 – “Are You Gonna Be My Girl?”

A band named Jet asked an age old question. Stocks were a mess, making three lower lows during an established daily downtrend.

2005 – “Beverly Hills”

Weezer’s song about Jed Clampett’s stomping ground seemed to fit well with the still inflating housing bubble. Stocks found “a low” in March before making “the low” in April.

2006 – “Crazy”

Gnarls Barkley had many of us sports fans wondering if things were amiss with the spell checkers. “Crazy” fit right in with housing prices. Rather than dropping for five minutes and then going on to make a new high (see 2013-2014), the S&P 500 followed a more traditional “bottoming process” path.

2010 – “Back Against The Wall”

In 2010, Cage The White Elephant could have been singing about the European Central Bank or Greece. The bottoming process looked eerily similar to 2006.

2011 – “On The Floor”

In 2011 a guy named “Pitbull” did a duet with Jennifer Lopez. Pitbull would eventually land in a Dr. Pepper commercial on the beach (he looked about as comfortable as Richard Nixon on the beach). Anyway, I digress. Stocks spent a good part of the year “On The Floor” and did not bottom until October.

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