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 Remains Skeptical Of June Rate Hike

Based on 30-day Fed fund futures prices, the market is pricing in a 23% probability of a Fed rate hike in June. Said another way, the market currently believes there is a 77% probability Janet Yellen and company will continue with the “do nothing” script at their June 14-15 gathering.

Action vs. No Action Could Determine Market’s Fate

The ratio of Treasury inflation-protected securities (TIP) vs. intermediate-term treasuries (IEF) can be used to monitor inflation expectations. All things being equal, in the current environment with lingering fears of global deflation, rising inflation expectations tend to be favorable for “risk on” assets. Conversely, when inflation expectations start to fall, it can adversely impact the equity market (see S&P 500 in the bottom portion of the graph below).

Navigating In Indecisive Stock Market Waters

The S&P 500 hit 2093 in 2014. On Tuesday, May 31, 2016, the S&P 500 traded at 2093.

This week’s stock market video examines the current state of the long-term standoff between the bulls and the bears, including some potential targets above and below the market.

Yellen Leaves Both Doors Open

Janet Yellen was at Harvard last Friday to receive an award. During her visit she made some remarks regarding the future path of interest rates. From the Harvard Gazette:

Yellen said she expects the economy and the labor market to continue to improve and that, as it does, interest rates will “probably” rise. “It’s appropriate — and I’ve said this in the past — I think, for the Fed to gradually and cautiously increase our overnight interest rate over time. And probably in the coming months, such a move would be appropriate.” Still, she urged caution. “If we were to raise interest rates too steeply and we were to trigger a downturn or contribute to a downturn, we have limited scope for responding, and it is an important reason for caution.”

The no hike in June camp could point to Yellen’s use of “in the coming months” and “an important reason for caution” as evidence the Fed Chair is not leaning toward a June hike. If the Fed takes no action in June, it is possible inflation expectations and stocks could break to the upside. If the Fed raises rates in the context of a skeptical market, it could trigger a reversal in both inflation expectations and risk assets.

 

SPY, SPX, QQQ, IWM, VIXY, SQQQ