Welcome to Asbury Research's
Logic-Over-Emotion Investing Blog
We launched the Logic-Over-Emotion Investing blog in 2008 as a means to stay in contact with investors that have previously expressed interest in Asbury Research. The blog contains brief excerpts from our 8 premium research reports. If you like our approach, we hope you will consider becoming a subscriber/client.
Money Market Flows & Stock Market Direction
The following is one of the 15 charts and corresponding commentary/analysis/strategy from our May 16th Investor Sentiment Survey report (access requires subscription, click here to view a sample report).
Investor Sentiment Survey, one of 8 different reports that we produce for subscribers, is a monthly report that displays and analyzes a broad list of both asset flow- and survey-based measures of both professional and retail investor sentiment and discusses their directional implications for the major areas of the US financial markets including US equities, US interest rates, the US Dollar, and economically-influential commodity prices.
Excerpt From: Investor Sentiment Survey
Asset Class: US Equities
Topic: Money Market Flows
Date: May 16th, 2013
Chart 2 measures investor sentiment according to near term money market flows by measuring the velocity of investor assets moving into and out of the Rydex Money Market Fund (RYMXX). The blue line in the lower panel plots the daily percentage that the assets invested in RYMXX have moved either above or below their 50-day moving average since 2011, with a corresponding chart of the S&P 500 plotted by the black bars in the upper panel.
Chart 2
The green arrow in the lower right edge of the chart points out that investors are just starting to retract from an historic most fearful extreme according to this metric, which suggests a recent defensive rush of investor assets into the money market — presumably in anticipation of a corrective decline in US equities.
The other green highlights show that, as a contrary indicator, previous instances of a retraction from these most fearful extremes have coincided with or led most every near term bottom in the S&P 500 in recent history.
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We periodically publish a brief excerpt like this one, taken from one of our 8 premium research reports, as a means to stay on the radar screen of professional investors like you that have previously expressed an interest in Asbury Research.
If you like our approach, we hope you will consider becoming a subscriber/client.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
Is AAPL Getting Its Shine Back?
From our January 14th blog posting, entitled Recent Price Action Suggests AAPL Has Worms:
“a recent major bearish trend change in AAPL (Apple Computer) clears the way for an eventual 19% decline to the next support level at $423 to $405 per share.”
* AAPL closed at $502 that day, and subsequently collapsed by another $117 per share or 23% to $385 on April 19th.
From our March 13th blog posting, entitled AAPL Meets Our $420 January Downside Target:
“AAPL met our $420 target on March 4th to capture a 104 point, 20% decline since our initial bearish call was made in our January 10th US Financial Market Chart Book. Looking ahead, meaningful rebounds in the price of an asset often occur from underlying support levels, once existing downside price targets have been met, which is precisely the environment that AAPL finds itself in now.”
* AAPL has since rebounded as expected, by $81 per share or 21%, between April 19th and May 7th.
Our most recent research (access requires subscription) now suggests the potential for an additional 13% to 18% advance in AAPL.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
The 6 Most Important Words In Wednesday’s Fed Statement
The 6 most important words in Wednesday’s Fed Statement:
“…fiscal policy is restraining economic growth.”
The FOMC (Federal Open Market Committee) wasn’t clear (probably on purpose) as to exactly what “fiscal policy” it was referring to.
But it is clear (at least to us) that it wanted to make a strong and clear reference to this issue by putting it in the first paragraph of the Statement.
Two likely candidates are: 1) sequestration cuts, and 2) recent reductions in government spending.
Chart Of The Week: General Electric (GE)
The following is one of the 11 charts and corresponding commentary/analysis/strategy from our Monday April 29th Keys To This Week report (access requires subscription, click here to view a sample report).
Keys To This Week, one of 8 different reports that we produce for subscribers throughout the month, is a detailed weekly outline of key market factors and corresponding charts pertaining to the US stock market and market sectors, US interest rates, the US Dollar, and economically-influential commodity prices that are most likely to influence US financial market direction during the next one to several months.
Excerpt From: Keys To This Week
Asset Class: US Equities
Topic: Correlation Analysis: General Electric
Date: April 29th, 2013
Key #4 of 11: General Electric (GE). The chart below plots GE daily since 2012 and points out that this US stock market bellwether tested, held, and rebounded from an April 22nd test of major underlying support at $21.8, its 200-day moving average, and that previous similar tests of this major trend proxy in December, November and June 2012 all resulted in the resumption of the bullish trend.
Considering the tight and relatively stable positive correlation between GE (the 11th largest US stock according to market cap) and the S&P 500 over the past 20 years, we are watching GE’s continued reaction to this major underlying support level as an indirect indication of upcoming direction in the US broad market.
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We periodically publish a brief excerpt like this one, taken from one of our 8 premium research reports, as a means to stay on the radar screen of professional investors like you that have previously expressed an interest in Asbury Research.
If you like our approach, we hope you will consider becoming a subscriber/client.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
Anticipating Relative Performance via Asset Flows
The following (green font) is one of the 8 charts and corresponding commentary/analysis/strategy from our February 25th Keys To This Week report (access requires subscription).
Keys To This Week, one of 8 different reports that we produce for subscribers at various intervals throughout the month, is a detailed weekly outline of key market factors and corresponding charts pertaining to the US stock market and market sectors, US interest rates, and the US Dollar, that are most likely to influence US financial market direction during the next one to several weeks.
Excerpt From: Keys To this Week
Asset Class: US Market Sectors
Topic: Asset Flows In Utilities Sector
Date: February 25th, 2013
This Week our trend model shifts to outperform in the defensive Utilities Sector.
The blue line in the lower panel of Chart 5 below plots our own Rydex Utilities Ratio, daily since 2007, which measures the percentage of daily assets invested in the Rydex Utility Sector Fund relative to the combined total assets invested in all Rydex sector funds.
A corresponding daily bar chart of the Utilities Sector SPDR ETF (XLU) is plotted in the upper panel.
Chart 5
The green vertical highlights between both panels show that Utilities are currently hovering at/starting to rise from historic under-invested extremes according to our metric, and that previous instances of this have coincided with or led some of the most important bottoms in XLU in recent history, amid relative sector outperformance.
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The next chart below is an updated version of Chart 5 from our February 25th report. The red highlights on the chart show that, during the past 2 months, our Rydex Utilities Ratio has moved from historic under-invested extremes to opposite, over-invested extremes as investor dollars have flowed into the sector, as we anticipated.
Our final chart below plots the daily relative performance of the Utilities Sector SPDR ETF (XLU) versus the S&P 500 ETF (SPY) since Q4 2012, with the period that our trend model has been on an overweight bias highlighted in green.
The chart shows that the Utilities Sector has outperformed the S&P 500 by 7% since our February 25th report, which is pretty amazing considering that Utilities is typically thought of as a defensive sector and the S&P 500 has coincidentally risen to new all-time highs during that same period.
Although there are additional components to our trend model which help us to time our entries and exits, these charts are a pretty good example of how we monitor investor asset flows to identify emerging sector-related opportunities — often before they become apparent on a basic price (or relative performance) chart.
We periodically publish a brief excerpt like this one, taken from one of our 8 premium research reports, as a means to stay on the radar screen of professional investors like you that have previously expressed an interest in Asbury Research.
If you like our approach, we hope you will consider becoming a subscriber/client.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
Chart Of The Week: Market-Leading Small Cap Looks Tired
The following (green font) is one of the 32 charts and corresponding commentary/analysis/strategy from our April 2013 US Financial Market Chart Book (access requires subscription).
“Chart Book”, one of 8 different reports that we produce for subscribers at various intervals throughout the month, is a monthly collection of key charts that focus on a broad array of financial asset prices and related data that collectively convey our best investment ideas for the next one to several months in the US stock market and sectors, US interest rates, the US Dollar, and in economically influential commodities like crude oil and copper.
It includes a 20-25 minute video in which John Kosar, Director of Research, discusses the implications of each chart and how they are likely to affect the direction of asset prices.
Excerpt From: US Financial Market Chart Book
Asset Class: Small Cap Stocks
Topic: Relative Performance
Date: April 2nd, 2013
Relative Performance: Small Cap Is Played Out
The Russell 2000, which has led the US stock market higher from the
November lows, is quarterly overbought vs. the S&P 500 and vulnerable
to upcoming relative underperformance.
The chart shows that Small Cap stocks have led and fueled the current November advance in the US broad market as the Russell 2000 (RUT) has outperformed the S&P 500 (SPX) by 7% between November 13th and March 28th. However, the Russell has actually underperformed the S&P 500 by 2% during just the past 2 sessions, and remains vulnerable to more upcoming weakness.
This is important because if the Russell is through leading the broad market higher, another sector of the market must step up to take its place for the November broad market advance to continue. Put another way, without some new leadership — and soon — the current broad market advance will fail.
We discuss this market leadership issue, and how we think it is likely to be resolved in the upcoming weeks, in our latest research. Subscribers can log into the Research Center to view it.
We periodically publish a brief excerpt like this one, taken from one of our 8 premium research reports, as a means to stay on the radar screen of professional investors like you that have previously expressed an interest in Asbury Research.
If you like our approach, we hope you will consider becoming a subscriber/client.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
Statistics Over Show Biz: Benchmark US Rates Historically Decline Between April & August
The following is one of the 24 charts and corresponding commentary/analysis/strategy from our April 2013 Global Seasonal Analysis report (access requires subscription).
Global Seasonal Analysis, one of 8 different reports that we produce for subscribers at various intervals throughout the month, is a monthly report that displays and analyzes annual, quarterly and monthly seasonal trends for 17 global asset prices including equities, benchmark interest rates, foreign exchange, and key commodity prices based on historical data going back to the 1950s.
Excerpt From: Asbury Research’s Global Seasonal Analysis
Asset Class: US Interest Rates
Topic: US 10-Year Treasury Note
Date: March 28th, 2013
The teal bar on the chart highlights April as the seasonally strongest month of the year for the yield of the US 10-Year Treasury Note since 1957. It represents the end of a four-month period of acute seasonal strength that includes four of the five seasonally strongest months of the year for these yields, and leads into a sustained period of overall weakness that culminates in August but extends through year end.
Chart 1
The height of the teal bar indicates that, on average since 1957, the yield of the 10-Year has risen by 1.36% in April. The red line shows that, also on average since 1957, US 10-year yields have posted a higher monthly close 64% of the time in April, which is by far the highest incidence of a positive close for any month during this period.
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A journalist/on-air personality on financial television has recently been referring to seasonality in financial asset prices as an “old wives tale”. Although this kind of confrontational journalism has become the norm on some programs, perhaps in an effort to help buoy recently plummeting ratings, we think this kind of reporting is intellectually dishonest.
In our view a strong and distinct 55-year statistical trend of declining benchmark interest rates between April and August is certainly worth paying attention to. Should it occur again this year, we think it would probably represent a flight-to-relatively-safety move back into US government bonds — and out of more risky US equities.
We periodically publish a brief excerpt like this one, taken from one of our 8 premium research reports, as a means to stay on the radar screen of professional investors like you that have previously expressed an interest in Asbury Research.
If you like our approach, we hope you will consider becoming a subscriber/client.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
Chart Of The Week: Bearish Retail Crowd May Be Good News For Gold Prices
The following is one of the 14 charts and corresponding commentary/analysis/strategy from our March 22nd Investor Sentiment Survey report (access requires subscription, click here to view a sample report).
Investor Sentiment Survey, one of 8 different reports that we produce for subscribers throughout the month, is a monthly report that displays and analyzes a broad list of both asset flow- and survey-based measures of both professional and retail investor sentiment, and discusses their directional implications for the major areas of the US financial markets.
Excerpt From: Asbury Research’s Investor Sentiment Survey
Asset Class: Gold & The Materials Sector
Topic: Retail Investor Bullishness In Gold Prices
Date: March 22nd, 2013
Chart 1 measures investor sentiment according to a daily survey of the collective bullishness of retail futures traders on gold prices, which is plotted since 2008 by the blue line in the lower panel. A corresponding daily bar chart of COMEX gold is plotted in the upper panel.
Chart 1
The curved green arrow on the lower right edge of the chart shows that these near to intermediate term oriented trend followers are just starting to move away from an historic least bullish (meaning most bearish) extreme on gold prices. The green vertical highlights between both panels show that previous similar extremes have coincided with what have been the most important bottoms in the price of the yellow metal in recent history.
Assuming that history repeats, these data suggest that gold prices may be at or near another similarly-important bottom now.
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We periodically publish a brief excerpt like this one, taken from one of our 8 premium research reports, as a means to stay on the radar screen of professional investors like you that have previously expressed an interest in Asbury Research.
If you like our approach, we hope you will consider becoming a subscriber/client.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
Chart Of The Week: Frothy Market Breadth In NASDAQ 100
The following is one of the 10 charts and corresponding commentary/analysis/strategy from our Monday March 18th Keys To This Week report (access requires subscription, click here to view a sample report).
Keys To This Week, one of 8 different reports that we produce for subscribers throughout the month, is a detailed weekly outline of key market factors and corresponding charts pertaining to the US stock market and market sectors, US interest rates, the US Dollar, and economically-influential commodity prices that are most likely to influence US financial market direction during the next one to several months.
Excerpt From: Keys To This Week
Asset Class: US Equities
Topic: Market Breadth
Date: March 18th, 2013
Chart 3
Market Breadth: NEAR TO INTERMEDIATE TERM BEARISH. Through Friday most measures of near term (monthly) market breadth are either at frothy extremes that have historically coincided with or led one to several month US stock market declines, or are showing a negative divergence which means that new index highs are being made on a decreasing number of rising constituent stocks.
The red highlights in Chart 3 above show that the 10-day moving average of new highs minus new lows in the NASDAQ 100 (blue line, lower panel) has reached an historic frothy extreme that has previously coincided with most every near term peak in NDX since 2011.
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We periodically publish a brief excerpt like this one, taken from one of our 8 premium research reports, as a means to stay on the radar screen of professional investors like you that have previously expressed an interest in Asbury Research. If you like our approach, we hope you will consider becoming a subscriber/client.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
AAPL Meets Our $420 January Downside Target
In our January 14th blog posting, entitled Recent Price Action Suggests AAPL Has Worms, we said that “a recent major bearish trend change in AAPL (Apple Computer) clears the way for another eventual 19% decline to the next support level at $423 to $405 per share.” APPL closed at $502 that day.
Here is the graphic from that blog posting, which actually was an excerpt from our January 10th US Financial Market Chart Book.
“Chart Book”, one of 8 different reports that we produce for subscribers throughout the month, is a collection of key charts and data that collectively convey our best investment ideas for the next one to several months in the US stock market and sectors, US interest rates, the US Dollar, and in economically influential commodities and includes a 20-25 minute video.
More recently, in our January 24th premium report entitled AAPL: How Low Can You Go? (access requires subscription), we pointed out a breakdown from a newly-formed chart pattern, a triangle, that targeted a 7% decline to $420 — which was right in the midst of the $423 to $405 band of support that we pointed out in our January 10th Chart Book and January 14th blog posting.
Here is one of the charts from that January 24th report.
AAPL met our $420 target on March 4th to capture a 104 point, 20% decline since our initial bearish call was made in our January 10th US Financial Market Chart Book.
Looking ahead, meaningful rebounds in the price of an asset often occur from underlying support levels, once existing downside price targets have been met, which is precisely the environment that AAPL finds itself in now.
Interested investors can request further information about our research, including services and pricing, by clicking here and completing the on-line form or by calling us at 1-888-960-0005.
