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Core Producer Prices Strongest In 2 Years

The chart below shows that the 2.1% year-over-year change in the October core (less food and energy) Producer Price Index (PPI) is the highest since November 2012.

The chart also shows that this metric has been steadily rising since bottoming at 1.1% in August 2013.

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What it Means for Investors

The biggest attribute of the PPI is its ability to predict the Consumer Price Index (CPI), which is due for release on Thursday.  The theory is that most cost increases that are experienced by retailers will be passed on to customers, which would then show up in the CPI data. Because the CPI is the most widely watched inflation gauge, investors will look to get a sneak preview by looking at the PPI figures. The Fed also knows this, so it studies the report intently to get clarity on future policy moves that might have to be made to fight inflation.

Asbury Research subscribers can view our latest research by clicking here.

Investors can view our latest appearances in the financial media by clicking here.


Yahoo! Finance / CNBC’s Talking Numbers:
Cisco Systems (CSCO)

Earlier today, about two hours before the closing bell, John Kosar appeared on the Talking Numbers segment of CNBC’s Street Signs to discuss Asbury Research’s forecast and outlook for Cisco Systems (CSCO), which reported its fiscal first quarter earnings after the close.

According to CNBC, Cisco Systems’ quarterly earnings and revenue topped Wall Street’s expectations as the company reported earnings ex items of 54 cents a share, compared to 53 cents a share in the year-earlier period, while revenue increased 1 percent to $12.25 billion from $12.09 billion a year ago.

Shares initially rose more than 2 percent in after-hours trade on the news and are now trading lower.

Scroll to the bottom of the page to view the video.

The following are the charts and bullet points from John’s appearance

 

The first chart below plots CSCO weekly since 2007 and shows that:

  • the stock rose above both its November 2007 downtrend line (red) and 200-day moving average (blue) in March 2013, indicating a major bullish trend change.
  • the stock tested and held its 200-day MA at $20.48 per share in December 2013, conforming the validity of the trend.
  • CSCO has been moving sideways since August 2013, indicating temporary investor indecision.
CNBC Chart 1

CNBC: CSCO Chart 1

The next chart plots CSCO daily since 2011 and shows that:

  • the stock is in the midst of a bullish trend that began in August 2011
  • but has been drifting sideways since August 2013, indicating temporary investors indecision as investors digest the August 2011 advance.
CNBC Chart 2

CNBC: CSCO Chart 2

Approximately 80% of the time, these sideways indecision areas precede the resumption of the previous bullish trend.  A sustained rise above $25.90 per share would confirm that this is the case with CSCO and would target a 27% rise to $32.00.

The other 20% of the time, these indecision areas become near term tops.  A decline below $22.70 would be necessary to confirm that this is the case and would then target a move at least back to the 200-day MA at $20.48 per share.

Asbury Research is bullish on CSCO for a number of reasons including:

  • the better odds of a bullish breakout from the “indecision area” between $25.90 and $22.70 per share,
  • the major trend of the stock is positive or bullish, and
  • the NASDAQ 100, of which CSCO is a constituent stock, is currently making new 14 year highs.

Asbury Research subscribers can view our latest research by clicking here.

Click the image below to view the video.

Yahoo! Finance / CNBC’s Talking Numbers:
Cisco Systems (CSCO):

JJK-CNBC

Appeared on:
November 12th, 2014 at 6:22 pm


Everyone’s A Genius When The Market Is Going Up

It’s easy to make money when the stock market is going up.  When stock prices are rising, everybody is a genius.  The hardest part of investing is knowing when and where to get out of the way when the market is going down.

In our view, avoiding the downturns is both the most conservative and the most lucrative way to make money over time in the stock market.  Our trend model for the S&P 500 was built to specifically accomplish this.

We help Asbury Research subscribers to avoid the downturns by looking out over the US and global financial landscape to try to identify any upcoming potholes before we hit them.  Our September 16th report, entitled 3 Reasons Why A US Market Peak May Be Emerging, is a good recent example of this and appears below for your review.

We actually discussed this report with CNBC a day later, on September 17th.

Click the image below to view the video.

CNBC_09-17-2014

The bellwether S&P 500 actually peaked 3 days later, at 2019 on September 19th, and subsequently declined by 10% into the 1821 October 15th low before quickly recovering to set a new all-time intraday high earlier this week.  In the process, during the third week of October our trend model signaled  that the larger bullish trend had resumed.

In this particular case, the US broad market had a standard 10% correction that was quickly followed by a rise to new all-time highs and the whole thing only took about 6 weeks.  This means any investor that weathered the storm came away unscathed. No blood, no foul. No worries.

But the thing about corrections is that no one knows how deep they will be until they are overWhat if it was a 20% correction?  Or 30%?   Back in 2008, which wasn’t that long ago, a lot of investors learned the hard way how important it is to protect your assets when the market is going down.

Asbury Research subscribers can view our latest research by clicking here.

Interested professional investors can request subscription information and a sample report by clicking here and providing contact information.


Research Report: What We’re Watching Today
Date: September 16th, 2014
Topic: The US Stock Market

3 Reasons Why A US Market Peak May Be Emerging

there are some significant technical/quantitative headwinds to be aware of this month that, depending on the market’s reaction to them, could give an early indication of an upcoming bearish reversal.”

“One of these is the NASDAQ 100 (NDX), which is testing and reversing from formidable overhead resistance at 4147 this week. Since technology stocks tend to lead the US broad market both higher and lower, we would view continued weakness from NDX 4147 amid a meaningful (below the 21-day moving average) contraction in the daily assets invested in the QQQs as evidence that a September US broad market correction may be emerging, which would be further supported by a decline below 1991 in the bellwether S&P 500.”

From our September 5th report entitled
Technology Critical To September Market Direction

Chart 1 below displays the NASDAQ 100 (NDX) daily since January and shows that the September bearish reversal from 4147 resistance has positioned the index just above 1st support at 3998 to 3980, which represents the July 24th benchmark high and the 50-day moving average (widely watched minor trend proxy).

Chart 1

A breakdown below 3998-3980 would clear the way for a deeper decline, potentially to the August 7th benchmark low at 3845.

The blue line in the lower panel of Chart 2 below shows that the daily assets invested in the PowerShares QQQ ETF contracted below their 21-day moving average yesterday (September 15th), which suggests that a new monthly trend of contraction is beginning.

Chart 2

There are several important nuances on this chart to take notice of:

  • These assets started to contract after reaching $47.56 billion on September 8th and 10th, which has been the highest level that they have reached this year, back on February 25th.
  • The contraction in assets immediately following their February 25th peak led a 9% decline in NDX to its April 15th low.
  • These assets started to contract this month just as NDX tested and failed at 4147 resistance as shown in Chart 1 above.

These daily assets in QQQ would have to expand back above their 21-day moving average, and stay there, to indicate that there is enough bullish near term conviction to fuel another leg higher in both QQQ and NDX. Without this, more weakness is likely.

The blue columns in Chart 3 below display the daily seasonal pattern for the month of September in the S&P 500 (SPX), via its daily average percentage change since 1957. September 2013′s daily closing prices are plotted by the red line.

Chart 3

The teal highlights show that Day 11, which is September 16th (today) this year, is the seasonally strongest day of the month in the US broad market index, after which the index collapses into month end.

Considering what is emerging in the market leading NASDAQ 100 and QQQs as shown in Charts 1 and 2, this seasonality chart may be particularly significant this year.

continued>>>


Active Managers At 7-Year Bearish Extreme On US Stocks

The following is a brief excerpt from our October 30th Investor Sentiment Survey which was distributed to Asbury Research subscribers before the US stock market opening this morning.  Investor Sentiment Survey is one of 8 different reports that we provide for subscribers at various intervals throughout the month.

Investor Sentiment Survey is a monthly analysis of a broad list of both asset flow- and survey-based measures of professional and retail investor sentiment, which focuses on their directional implications for the major areas of the US financial markets including the US stock market, US interest rates, the US Dollar, and economically influential commodity prices including copper, crude oil, and gold.

» View Sample Investor Sentiment Survey from Oct 20th 2011


Research Report: Investor Sentiment Survey
Date: October 30th, 2014
Topic: US Stock Market

 

Chart 2 measures investor sentiment according to a daily survey of active Registered Investment Advisors (RIAs) via the NAAIM (National Association of Active Investment Managers) Exposure Index, which is plotted since 2008 by the blue line in the lower panel.

The NAAIM Exposure Index represents the average weekly exposure to US Equity markets reported by their membership.

Chart 2

The highlighted area shows that these intermediate term-oriented professional trend followers are also rising from an historic least bullish extreme on US equities, of just 14% or less, one which has previously coincided with important market bottoms in the S&P 500 (upper panel) in October 2011, June 2010, and November 2008.

We view this metric as corroborating evidence that trend following investors are currently too negative on the US stock market, which history shows is precisely when meaningful bullish price reversals often begin.

continued>>>


Our investor sentiment metrics reveal how different types of investors are positioned in the financial marketplace, whether it’s the stock market, US Treasuries, the US Dollar, or key commodities like copper, gold or crude oil, and are an important component of our trend model for the US stock market.

When the collective positions of these different investor demographics become diametrically opposed to one another, important and “investable” changes in market direction typically occur. 

A great example of this is our early June report, entitled Oil Prices: Smart Money Skeptical At $103 Per Barrel, which got our subscribers in front of what has thus far been a $19 per barrel, 19% decline in crude oil prices.  At some point in the not-too-distant future, these same metrics will indicate a good opportunity to buy oil and energy-related assets again.

Asbury Research subscribers can view the entire report by clicking here.

Interested professional investors can request a 2-week trial of our entire research service by clicking here and providing your contact information.


Is The 2014 Decline In US Interest Rates Over?

The following is a brief excerpt from our Monday October 20th Keys To This Week report, one of 8 different reports that we provide for clients at various intervals throughout the month (typically 3-4 reports per week).

Keys To This Week, published on Mondays, is a bullet-pointed list of key market factors with accompanying charts that are most likely to influence US financial market direction during the next one to several weeks. It includes both strategic (looking out 1-2 quarters) and tactical (looking out over the next 30 days) investment ideas, plus our trend model‘s current bias for US stocks, market sectors, bonds, the Dollar, and economically influential commodities like crude oil and gold.

» View Sample Keys To This Week from Oct 17th 2011


Research Report:  Keys To This Week
Date: October 20, 2014
Topic: US Interest Rates

 

US Interest Rates & Treasuries

This week our table shifts to an equally-balanced distribution of key Near Term market factors for long dated US Treasury prices, from a Positive one during the previous 3 weeks, while retaining last week’s balanced alignment of key Intermediate Term factors. Although at first glance our table looks to be indicating a neutral reading, the types of metrics populating the Near Term Positive and Negative quadrants tell a more detailed story.  This week’s Near Term Positive metrics indicate that the monthly trend in long dated US Treasury prices is still bullish amid positive ETF asset flows and an unmet key yield level at 2.07%.  However, every Near Term Negative metric shows long term US Treasury prices at historic extremes, in terms of intra-market spreads, investor sentiment, and technically overbought conditions, all which previously coincided with or led every peak in these prices, and bottom in long term US interest rates, in recent history. Therefore, even though our trend model is still positive heading into this week, those managers who have been long US Treasuries all year per our 2014 analysis and forecast may consider taking some profits and/or tightening protective stops as this week’s data collectively suggest that long dated US Treasury prices are probably within weeks of an intermediate term peak.

Table 4

Table 4 of 5

continued>>>


Asbury Research subscribers can view the entire report by clicking here.

Interested professional investors can request a 2-week trial of our entire research service by clicking here and providing your contact information.


IEF Meets Our 107.00 Target

The iShares 7-10 Year Treasury Bond ETF (IEF) met our 107.00 target yesterday, October 15th, first mentioned in our May 8th report entitled US Treasury ETFs Target Even Lower Yields, to capture a $4.19, 4% advance in a little over 5 months.

During the same period the yield of the benchmark US 10-Year Treasury Note collapsed by 62 basis points to 2.00%.

From that report:

Since the beginning of the year, when bellwether US 10-Year Treasury Yields were trading at 3.00%, our research has suggested a decline in US 10-Year Treasury Yields to the 2.60% – 2.50% area. Yields are there now, having closed as low as 2.60% on May 2nd. This week’s emerging breakout from 7 months of sideways investor indecision in the iShares 7-10 Year Treasury Bond Fund (IEF), which targets an eventual, additional 4% rise to 107.00 over the intermediate term, supports a deeper decline in the 10-Year.

Please login to our Research Center for our latest research and strategy pertaining to US interest rates and Treasuries.


US 10-Year Yields Meet Our 2.07% Target

The yield of the benchmark US 10-Year Treasury Note has declined to as low as 2.03% thus far this morning, meeting our 2.07% downside target first mentioned in our May 16th report, entitled Now That Our 2.51% Target Has Been Met, What’s Next For US Interest Rates?, when these yields were trading at 2.52%.

Meanwhile, the iShares 20+ Year Treasury Bond ETF (TLT) has coincidentally risen by $10.94 or 10.0%.  For perspective, the S&P 500 has declined by 1% during this same period.

From that report:

Now that our initial 2.51% downside target in the yield of the US 10-Year Treasury Note has been met, our focus turns to a much more important level at 2.40%.  Meanwhile, unmet upside targets in the CBOT 10-Year Note and the iShares 7-10 Year Treasury Bond ETF (IEF) suggest that at least an addition 2% to 3% rise in mid to long dated US Treasury prices is likelyWe will view these two assets’ proximity to their upside targets, if and when 10-Year yields decline to 2.40%, as an indication of whether the 10-Year continues even lower to its next key level at 2.07%…”

Please login to our Research Center for our latest research and strategy pertaining to US interest rates and Treasuries.


Taiwan Weighted Index (TWSE) Meets Our 8650 Target

The Taiwan Weighted Index (TWSE) has declined to as low as 8635 today, meeting our 8650 downside target first mentioned in our September 29th Keys To this Week report, to capture a 340 point, 4% decline in the index in a little over 2 weeks.  

Meanwhile, the positively correlated S&P 500 has coincidentally declined by 111 points or 6%.

From our September 29th report:

“TWSE broke down last week from 2 months of sideways investor indecision, indicating that a significant peak is in place at the index’s July 15th high and targeting an additional 4% decline to 8650. Considering TWSE’s tight and stable positive correlation to the S&P 500 since 2000, last week’s breakdown in TWSE is seen as being indirectly negative for the US broad market.

Please login to our Research Center for our latest research and strategy pertaining to US and global stock markets.


US 10-Year Yields Meet Our 2.23% Target

The yield of the benchmark US 10-Year Treasury Note has declined to as low as 2.18% thus far this morning, meeting our 2.23% downside target first mentioned in our August 18th Keys To this Week report, when these yields were trading at 2.40%.

Meanwhile the CBOT 30-year T-Bond contract has risen by 4 16/32nds or 3.2% while the iShares 20+ Year Treasury Bond ETF (TLT) has risen by 4.63 or 4.0%.

From that report:

“The most important and influential market factor of the past week was US 10-year yields’ collapse below the pivotal 2.40% area on Friday. This suggests that yields’ 2014 decline from 3.00% is not over, and clears the way for a deeper decline to 2.23%, and potentially to 2.07% later on this year. Meanwhile, expanding futures open interest, the latest investor sentiment data, a 56-year seasonal trend, and a bullish chart pattern in the iShares 7-10 Year Treasury Bond ETF (IEF) with an unmet target 2% above the market collectively establish favorable conditions for long dated US Treasury prices to continue higher through the 3rd Quarter.”

Please login to our Research Center for our latest research and strategy pertaining to US interest rates and Treasuries.


US Stock Market Trend Model Update: Q3 2014

The following chart plots the performance of the Asbury Research Trend Model for the US stock market, which uses the S&P 500 as a proxy, beginning in 2007 and updated through September 2014.

It shows that our model has accumulated 1096 points since January 2007 versus 547 points for the S&P 500. In percentage terms, the Asbury Research Trend Model has produced a 77% return during this period versus a 38% return for the S&P 500.

Asbury Research Trend Model" S&P 500, 2007-2014

Asbury Research Trend Model: S&P 500, 2007-2014

This is provided for information purposes only. Past performance or back-tested results may not necessarily indicate future results. The performance indicated from back-testing or historical track record may not be typical of future performance. No inferences may be made and no guarantees of profitability are being stated by Asbury Research LLC. The risk of loss trading in financial assets can be substantial. Therefore, you should therefore carefully consider whether such trading is suitable for you in light of your financial condition.

US Stock Market Trend Model: Key Features & Objectives

  • The model utilizes 3 quantitative inputs that measure market internals, price momentum, and trend velocity, and includes a price-based metric for risk aversion.
  • This is a long-only model that uses the S&P 500 as a proxy for the market. It is either long or neutral: no short positions, leveraged longs, or hedging via derivatives.
  • It was built with the objectives of: 1) buying on weakness, 2) being in the market as much as possible, 3) exiting on meaningful declines, and 4) quickly re-entering the market as soon as there is evidence that a bullish trend has re-emerged.
  • Since 2007, the model has averaged 4.6 signals per year or approximately 1 per quarter.

Since 2007, Our Model Has:

  • slightly underperformed the S&P 500 in exceptional years like 2009 and 2013,
  • modestly outperformed during average years like 2007, 2010, and 2012 and,
  • most important, significantly outperformed and/or avoided losses during poor years like 2008 and 2011.

Attempting to get out of the way of an emerging market decline comes with the inherent risk of potentially missing out on some performance — especially during exceptional years which we would define as a 15% or greater annual rise in the S&P 500. Diminished hedge fund returns since 2013 are evidence of this.

However, if you look back over a bigger span of time, our model’s performance since 2007 is a testament to intelligent quantitative risk management as it has more than doubled the S&P 500′s performance during that period without using leverage or short positions. We view this as proof that, over time, during a period that includes all market environments including bullish, bearish, and neutral price trends, a conservative and repeatable quantitative approach can significantly and consistently trump passive buy and hold.

Our trend model is just one of dozens of different metrics and data series that we utilize to produce a comprehensive market analysis, one that we believe is collectively more insightful and forward-looking than any of its individual components.

You can get more information and view more tables that pertain to out trend model by Clicking Here.

Professional investors can request a two-week trial of Asbury Research by clicking the button below.

 

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