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.

Are Big Moves Coming in Stocks?

A May 16 article outlined the concepts shown below in detail; big moves often come in the stock market after long periods of consolidation.

Normal Retracement Or New Trend?

Is there anything else historically that says a big move may be coming in equities? Yes, the concept of Fibonacci retracements (see chart below). It is normal and to be expected that in the context of an established downtrend to see countertrend moves back to one of the three major Fibonacci retracements (Fibs). So far, in 2016 the sharp rally off the February lows has not exceeded “normal retracement” territory. In this case, retracement refers to the retracement of the down move from point A to point B.

Fibs Help With Bullish and Bearish Odds

Do markets always reverse near the major Fibs? No, Fibs simply help us with probabilities. The weekly chart of the NYSE Composite (2006-2016) below shows a bearish case and a bullish case.

The point of the exercise is that big moves can result once the market decides which way it wants to go near the 61.8% retracement of a large market decline. The bearish move from the 61.8% level in 2008 to the 2009 stock market low was a drop of 56% (a big move). The bullish move between the 61.8% level in 2011-2012 was a gain of 44% (a big move).

How Much Value Can Be Added Or Lost?

The table below puts a 56% drop in perspective based on numerous portfolio sizes.

Conversely, a 44% gain can make a significant contribution to an individual’s nest egg.

Big Move Can Be Up Or Down

The market was on the ropes in early February and righted itself after central banks started throwing spaghetti at the monetary policy wall.

Which way is the market leaning now? As noted in a May 13 video Noticeable Cracks In Bullish Foundation, the market’s current bias is starting to shift back to the concerning side of the bull/bear ledger. However, global central banks are still throwing numerous forms of market-friendly spaghetti to see if anything sticks, as outlined on May 11. Under our approach, we will allocate based on the facts in hand, while remaining open to a big move up (similar to 2012-2015) or a big move down (similar to 2008-2009). The hard data will guide us if we are willing to monitor the markets with a flexible, unbiased, and open mind.