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.

Risk Management Contingency Plans

As noted on March 24, the stock market has been in a volatile sideways pattern for nine months.

Our approach is concerned with being properly allocated for the next big move (7% to 30%), rather than the next small move within an ongoing series of whipsaws (2%-4%). Therefore, it is best to remain as patient as possible within the context of the model/rules until the market begins to more clearly tip its hand, either to the upside or downside.

Managing Based On Facts, Rather Than Fear

It is uncomfortable for all human beings when markets are weak. However, decisions based on fear or the desire to reduce short-term anxiety tend to hurt long-term performance. Significant damage to portfolios can occur during prolonged stock market corrections and bear markets. Significant damage does not occur in a few days or within a trading range (see last nine months).

Correction/Bear Not Possible Without A Lower Low

We know with 100% certainty that a three-month correction or three-year bear market cannot begin until the S&P 500 makes a lower closing low below 2039 (see chart below). Therefore, as long as the S&P 500 remains above 2039 (on a closing basis), some patience remains in order.

Click here for a larger version of the chart above.

Ugly Markets Can Rally

Q: Why should we remain patient? A: It is possible that the S&P 500 never closes below 2039 and instead rallies 20% in a bullish fashion. It is easy to take a weak market and extrapolate to the downside. It is much harder to remain prudent and patient. Under our system, there is no need to guess, forecast, or anticipate based on fear.

Rules Require Weekly Review

Regardless of where the S&P 500 is trading late in Friday’s session, our rules require that we check our allocations before the end of the week relative to the hard and observable evidence tracked by the market model. A Friday close below 2039 would most likely require some type of defensive action, but the facts will govern our actions.

The More Important Levels

As noted in a recent video (view clip), the pink, orange, and green lines (1988, 1980, & 1972 below) are the more important bull/bear lines of demarcation.

If and when action needs to be taken to protect our hard-earned capital, we will take action based on the rules, without hesitating. If the facts and rules call for patience, we will continue to be patient.

Stay Ahead of Everyone Else

Get The Latest Stock News Alerts