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.

Could The Bulls Run Into Year-End?


As noted in detail on May 14, it is always important to understand both the bullish and bearish case for stocks. We recently noted two potentially bullish developments: an unprecedented drop in investor fear, and what appears to be a successful retest of a long-term breakout for the broad NYSE Composite Index. While the headline number for Thursday’s GDP report was impressive, the report contained something that may keep the Fed in a market-friendly mode.

A Dovish GDP Report?

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A case can be made that this week’s GDP report was skewed favorably by Uncle Sam. From Bloomberg:

“The GDP number’s fine, not spectacular,” Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York, said by phone. “The inflation data isn’t great and the quality of the GDP beat isn’t great as a lot of it is from government and defense spending. It adds to dovishness.”

Fear Of Deflation Impacts Fed

Low inflation can eventually slip into deflation territory. Once deflation takes hold, it can morph into a negative feedback loop know as a deflationary spiral. If you were surprised that bonds started strongly Thursday after what appeared to be a strong GDP report pointing to an sooner rather than later Fed rate hike, bond buyers were focused on the inflation data. From The Wall Street Journal:

The lack of inflation in the U.S. and around the world remains a concern for economy watchers and a key factor keeping bond buyers around. Within Thursday’s GDP report, the price index for personal consumption expenditures rose at a 1.2% annual rate in the third quarter, from 2.3% in the second quarter.

Investment Implications – The Weight Of The Evidence

As noted in last week’s video, the improvement in the hard evidence has allowed us to scale into equity positions (NYSEARCA:SPY) numerous times in the past two weeks. The “fear reset” in the VIX (NYSEARCA:VXX) is still holding in a bullish manner for equities (see below). If the market can continue to gain traction based on earnings, GDP, and tame inflation data, we will most likely continue to increase equity exposure.

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Concerns Remain

Europe’s economy and low inflation could eventually impact the US. We must also continue to keep an open mind about all outcomes as the Fed begins to normalize interest rates.

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