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.

Odds Of Stock Rally Pushing Higher

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ECB Ready To Act

In a familiar theme of words and little in the way of action, the head of the European Central Bank was jawboning again Monday. From The Wall Street Journal:

“The European Central Bank is willing to take additional easing steps including purchases of government bonds if needed to keep inflation from staying too low for too long, ECB President Mario Draghi said Monday. Mr. Draghi’s remarks, in testimony to the European Parliament, underscored the central bank’s commitment to expand its balance sheet-the value of assets it holds-and if necessary widen its stimulus efforts to ensure that inflation rises back to the ECB’s target of just below 2%.”

The theme of ongoing “easy money” ties in nicely with what history says about the current stock rally in the United States.

Rare And Unprecedented

Since numerous rare occurrences, including the massive V-type rally in stocks (NYSEARCA:VTI), could skew the current landscape from a historical perspective, it is important we remain open to all outcomes (bullish, bearish, and sideways). However, it is also prudent to ask:

Can we learn anything from similar rallies in the last 10 years?

Weather Analogy

Just as meteorological conditions shift slowly over time between the middle of summer and the dead of winter, markets experience observable changes as a bottom is formed after a correction and during the subsequent rally. The market was weak (temperature of roughly 13 degrees) just prior to the October 15 low. Since then, conditions have improved relative to the market’s profile (temperature of roughly 83 on November 7, 2014). How has the market performed in the past after moving from a profile of 13 to 83? That question is explored in this week’s video.

The table below is described in the video above, along with charts showing numerous examples from recent history.

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Investment Implications – The Weight Of The Evidence

Regular readers know our approach frowns upon forecasting and instead allocates based on the facts we have in hand. Therefore, the exercise above is simply about exploring the range of possibilities based on recent history. The market may go sideways or it may go down, but history tells us upside is also a realistic outcome in the months ahead. Based on the evidence we have in hand, our market model is calling for a heavy weight to equities (NYSEARCA:SPY), complemented by a modest stake in bonds (NYSEARCA:TLT). If the bulls can carry the market over the 2043 to 2046 level this week, the evidence may call for another incremental add to our stock ETF holdings.

ECB image Adam Baker Flickr

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