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 Says 85% Chance Fed Makes No Move

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During the trading session Tuesday, the market was pricing in a 15% chance the Fed raises rates Wednesday. Therefore, if the Fed announces a rate hike, the initial market reaction could be sharp and even exhibit characteristics of widespread panic.

91% Of Primary Dealers In No Hike Camp

According to Bloomberg, 21 of 23 primary dealers are forecasting a “no hike” outcome at 2:00 pm ET Wednesday. These figures also tell us if the Fed hikes, significant volatility may follow in a wide variety of asset classes.

An Insider’s Take

The Wall Street Journal’s Jon Hilsenrath has been covering the Fed for years. Hilsenrath’s take on this week’s meeting aligns with the markets:

“Federal Reserve officials, lacking a strong consensus for action a week before their next policy meeting, are leaning toward waiting until late in the year before raising short-term interest rates. It is a close call. But with inflation holding below the Fed’s 2% target and the unemployment rate little changed in recent months, senior officials feel little sense of urgency about moving and an inclination toward delay, according to their public comments and recent interviews.”

Our Approach Will Remain The Same

If the Fed raises rates and the markets react in a violent manner, it will not alter our approach in any way. We will make decisions based on hard data and facts. If the hard data says “do nothing”, we will ride out the volatility. If/when the math hits “volatility to respect” thresholds, we will take action as needed.

It is possible a surprise rate hike could induce a selloff similar to the plunge following the Brexit referendum. The Brexit selloff lasted two days and was quickly retraced via a sharp rally in the other direction. A “sell first ask questions later” reaction remains the lower probability outcome. However, the odds of a surprise rate hike are not zero. It is prudent to be prepared for all outcomes.

 

SPY, SPX, QQQ, IWM, VIXY, SQQQ VOO