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.

Retest of the Lows is Taking Place Now

No Improvement So Far

Given the severity of the selloff in stocks in late August, it was not surprising to see the subsequent rally attempts fail. As we noted numerous times in recent weeks, including September 3 and September 17, bottoms tend to be a process.

Retests Take Many Forms

The expression “retest of the lows” covers numerous market scenarios, including the historical cases shown below when a higher low was made. A retest can stay above the recent low, hit the recent low, or exceed the recent low. The key is we need to see evidence of a sustainable turn on our timeframe; something that has not happened over the past few weeks.

Does The Big Picture Support An Imminent Low?

This week’s video looks at reasonable downside targets for the S&P 500, which helps put some more context around the “retest” subject.

Few New Hints On Monday

There was very little in Monday’s session that said “today is the final low”. For example, the VIX “fear index” held on to most of Monday’s gains into the close. The chart of the VIX below has shown some renewed improvement in recent days.

The S&P 500 also closed near the session low, with long-term Treasuries closing near the session high, which is a “fear” look, rather than an “imminent and sustainable bottom” look. Monday’s volume on SPY was above average (in contrast to many recent green days when SPY volume was below average).

Retest Is Not A Prediction

Experience says it remains important to keep an open mind about all outcomes (bullish and bearish). The term retest can bring some bias to the table if we are not careful.

Investment Implications – The Weight Of The Evidence

Could stocks post a green day Tuesday? Sure, green days occur all the time during downtrends. We want to see evidence of a sustainable turn. That evidence can begin to surface at anytime, but under our approach we need to see it rather than anticipate it. Therefore, we continue to maintain a defensive-oriented allocation.