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Exiting Our December Outperform Bias In Cons Discretionary

Our sector rotation model moved back to a market perform bias on the Consumer Discretionary Sector this morning, from an outperform bias as of December 1st 2014, to capture 6% of relative sector outperformance versus the S&P 500 during that almost-five-month period.  This change of bias was due to the recent contraction in investor asset flows from an  historically very over-invested sector.

The following (green font) is a brief excerpt from this morning’s Keys To This Week report, one of 8 reports that we produce for subscribers, where we display and discuss the reasons for our change of bias on Consumer Discretionary, and also display our model’s current bias for the other sectors of the S&P 500.


Excerpt From: Keys To This Week
Date: April 20th, 2015
Subject: US Stock Market Sectors

The green highlights in Table 2 below show that, for the second consecutive week, the biggest inflow of ETF-related investor assets over the past 1 week, 1 month, and 3 month periods has been into Energy.  As a direct result, Energy was the only sector to finish in positive territory last week, gaining 2.2%.  The red highlights show the biggest outflow of assets over the past 1 week came from Consumer Discretionary.

Table 2

Chart 7 below shows the current distribution of assets invested in the 9 Sector SPDR ETFs through Friday, and points out that Consumer Discretionary is currently the most over-invested sector of the S&P 500 as it comprises 11% of the sector pie versus an historic 5%.  Not shown is that this is the most over-invested that this sector has been in the history of our data, which warns of its vulnerability to upcoming relative underperformance versus the S&P 500.

Chart 7

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Asbury Research Subscribers: Login to the Research Center to view the rest of the report.

Interested Investors can request more information about our independent investment research services by either completing the Contact Us Form or by calling us at 1-224-569-4112.


Keys To This Week: The Dow Transports

Keys To This Week is one of 8 different reports that we produce for subscribers throughout the month. It includes a bullet-pointed list of what we believe are the most important and potentially market-moving charts, indicators, and data series to be aware of during the current week.

The following is one of this week’s twelve “Keys” for the US stock market.


Report: Keys To This Week
Date: April 13th, 2015
Subject: US Stock Market

Key # 8 of 12: Market Breadth, Dow Transports (DJTA), NEAR TERM BULLISH

The percentage of Dow Transportation Index (DJTA, see Chart 6 below) constituent stocks trading above their 50-day moving average is currently bottoming/rising from an historically low extreme of 31%, indicating washed-out market breadth, that has previously coincided with near term US market advances.

Chart 6 of 14

Chart 6 of 14

The Dow Transports have been the weak link in the US stock market lately.  Moreover, this economic barometer has been negotiating is 200-day moving average — a widely-watched major trend proxy — since March 26th, identifying this level as a major decision point from which its next significant directional move is likely to begin.

This chart suggests favorable conditions, from a market breadth standpoint, for the Transports to begin a new near term move higher now, just as it did on January 14th, and previously on October 15th, August 8th, and during April and February of 2014.  If the Transports fail to rebound from here, however, it would be analogous to a market that cannot rally on positive fundamental or economic news and warn that a deeper, more sustained decline is coming.

continued…


Asbury Research Subscribers can login to the Research Center to view the rest of the report.

Interested Investors can request more information about our independent investment research services, including a sample report, by either completing the Contact Us Form or by calling us at 1-224-569-4112.


FTSE 100 Meets Our 7100 Upside Target

The London FTSE Index essentially met our 7,100 upside target on Friday April 10th by trading as high as 7095 intraday.  This target was first discussed in our July 1st Keys To This Week report to capture a 787 point, 13% advance over the past 21 months.

From that report:

“… the index’s January breakout from 2 years of sideways congestion targets an eventual 13% rise to 7100 that will remain valid above 5835.  Considering the tight and stable 20 year positive correlation between the FTSE and the S&P 500, we are viewing the FTSE’s reaction to this pattern as an indirect indication of intermediate term direction in the US broad market.”

The S&P 50o coincidentally rose by 29% during the same period.

Login to the Research Center for our latest analysis and strategy pertaining to global equity prices.


The Key Indicator To Watch This Week

The following is an excerpt from our Tuesday April 7th report which was sent to clients as the US stock market opened that day.

The type of report, which we call What We’re Watching Today, is one of 8 different reports that we produce for subscribers throughout the month. WWWT is a typically a quick chart, idea, or observation taken directly from our dynamic watch list of key markets and market factors, and often identifies emerging changes in market direction.


What We’re Watching Today

The Key Indicator To Watch This Week

Posted on: Tuesday, April 7th, 2015

Conclusion, Investment Implications, Strategy

The CBOE Volatility Index (VIX) begins this week below its 50-day moving average, currently at 15.64, indicating a level of near term investor complacency that is characteristic of US stock market advances.  It would take a sustained rise above 15.64 to indicate that investors are collectively apprehensive enough to facilitate a deeper market decline.

Analysis and Rationale

The chart below plots the CBOE Volatility Index (VIX) daily since December in the lower panel, with a corresponding chart of the S&P 500 (SPX) in the upper panel.  The highlighted area in the lower right edge of the chart shows that the VIX has been hovering just below its 50-day moving average, currently situated at 15.64, for the past two sessions.

S&P 500 & The VIX since December

For the past two years the 50-day moving average has been a very accurate line of demarcation in the VIX, separating a level of investor complacency that is supportive of US broad market advances from a level of investor fear that triggers and helps to fuel US broad market declines.

As long as the VIX remains below the 50-day MA, as the green vertical highlights show that most recently occurred on April 1st, March 26th, and March 11th, the US stock market is likely to maintain a near term upward bias.

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The S&P 500 (SPX) is now trading 21 points or 1% higher than it was when that report was initially sent to subscribers 3 days ago.  We are not day traders, but rather have a strategic view looking 1-2 quarters out and are making near term tactical decisions within that strategic view.  But, in a sideways environment like the US market has been in since the beginning of the year, getting in front of a move like the one this week can make a meaningful difference in your portfolio.

Asbury Research Subscribers: Login to the Research Center to view the rest of the report above, as well as our April Investor Sentiment Survey which was distributed earlier today.

Interested Investors can request more information about our independent investment research services, including a sample report, by either completing the Contact Us Form or by calling us at 1-224-569-4112.


8 Reasons To Make Us Your Investment Research Provider

  1. Independence:

    Asbury Research has no affiliations with broker-dealers, banks, or other financial institutions. Our sole objective, and how we get paid, is to provide our subscribers with investment ideas that either make money or avoid losing money.

  2. Experience:

    John Kosar, Director of Research began his career in the Chicago futures pits in 1980, which turned out to be an incubator for his integrated intermarket approach and “under the hood” understanding of how financial markets work.

  3. Clear, Actionable Investment Ideas:

    Asbury Research gives conclusions. We are strategic 1-2 quarters out and tactical within 30 days. This means that we provide our subscribers with actionable intra-month buy and sell ideas that attempt to capture 70% or more of an intermediate term price trend.

  4. Comprehensive Macro Scope:

    We are not bottom-up stock pickers, but instead utilize an integrated top-down macro approach that produces inter-related, cross-checked strategies in a broad array of financial assets including the US stock market, US market sectors, US interest rates, the US Dollar, and alternative investments like commodities and REITs. We use ETFs to provide specific, actionable investment ideas in all of these assets.

  5. Quantitative / Technical Process:

    Our investment strategies are based on objective, repeatable metrics including investor asset flows, statistical relationships between a broad array of domestic and global financial asset prices, and price patterns that have consistently repeated themselves throughout history – rather than vague, anecdotal opinions on the latest economic data or geopolitical conflict.

  6. Unique Metrics:

    Asbury Research’s Sector Rotation Model is based on John Kosar’s own in-house metrics that 1) define historically over-invested and under-invested US market sectors based on ETF asset flows, then 2) wait for asset flows to support a move back towards historical norms of investment, and finally 3) utilize price momentum-based metrics to confirm that the expected price move in the asset is actually underway.

  7. Performance:

    Our Correction Protection Model for the US stock market has captured 1,192 basis points in the S&P 500 from 2007 through 2014 (+84%), almost doubling the S&P 500’s 641 basis point rise (+45%) during the same period, with about half the volatility of returns and without using any leverage, short positions, or derivatives. Our model is binary — either in the market or out of it — and outperforming by simply being invested when stock prices are going up and out of it when they are not.

  8. Our Clients Love Us:

    “John Kosar at Asbury Research has provided us with timely research and has helped us to avoid making bad decisions at market turning points.   I use “Keys” (To This Week) as a part of my decision making process in equities and fixed income and eagerly wait for it on Monday mornings  Well worth the cost.”

    Investment Committee Partner, Registered Investment Advisor, Wisconsin

Contact us via email at sales@asburyresearch.com or by phone at 1-888-960-0005 to request trial access to Asbury Research, and to get further information pertaining to pricing and services.


How We Got In Front Of Today’s Fed-Fueled Rally

The following is a brief excerpt from our Wednesday March 18th report, entitled Asset Flows Heading Into Today’s Fed Statement, which was sent to clients as the US stock market opened this morning.

The type of report, which we call What We’re Watching Today, is one of 8 different reports that we produce for subscribers throughout the month. WWWT is a typically a pre-market opening report, taken directly from our dynamic watch list of key markets and market factors that we we use to identify important changes in market conditions and direction.


What We’re Watching Today

Asset Flows Heading Into Today’s Fed Statement

Posted on: Wednesday, March 18th, 2015

Conclusion, Investment Implications, Strategy

Heading into the release of today’s Fed Statement at 2 pm ET today, investors appear to be collectively leaning towards the likelihood of more dovish/market bullish language by the Federal Open Market Committee (FOMC) as the total net assets invested in most key US stock market-related ETFs have been expanding since March 6th to March 13th.

Analysis and Rationale

Investor asset flows tend to slightly lead directional movement in the price of an asset because they “fuel” that move, either by expanding to drive prices assets higher or by contracting which causes prices to decline. The following 6 charts indicate how investors are collectively leaning, direction-wise, heading into today’s FOMC’s meeting announcement at 2 pm ET today.

S&P 500 SPDR ETF (SPY)

The green highlights in Chart 2 below show that the outstanding shares in SPY have also recently reversed upward, on March 11th, just as they previously did on January 30th, December 16th, October 21st, and August 8th, all which closely coincided with near bottoms in SPY.

Chart 2

Chart 2

In addition, these outstanding shares have also risen back above their 21-day moving average as of yesterday (March 17th), indicating that a new trend of monthly expansion is beginning. This is typically positive for SPY.

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The S&P 500 (SPX) traded as much as 13.05 points lower at 2061.23 today, shortly before the Fed Statement was released, and subsequently rose by 38.19 points or or 2% to close at 2099.42.  Our Correction Protection Model remains on a February 9th buy signal.

Asbury Research Subscribers: Login to the Research Center to view our latest research, including the rest of today’s report.

Interested Investors can request more information about our independent investment research services, including a sample report, by either completing the Contact Us Form or calling us at 1-800-960-0005.


John Kosar’s March 6th Interview: Financial Sense

Click the link below to listen to John’s Kosar’s Thursday March 6th interview with Ryan Puplava of the popular Financial Sense website, where John and Ryan discuss Asbury Research’s: 

  • near to intermediate term US stock market outlook,
  • 2015 forecast for US interest rates,
  • picks for upcoming relative outperformance in US stock market sectors, and
  • 2015 outlook for economically-influential commodity prices like crude oil, copper, and gold.

Click Here To Listen To The Interview

You can jump ahead to the 40:00 minute mark of the recording
to go directly to John’s interview.

 

Thanks to Jim Puplava and his staff for the invitation and another opportunity
to speak to his large and loyal following of professional and individual investors.

 


Sector Investing: Is This Winning Sector Played Out?

Our sector rotation model utilizes a combination of proprietary ETF asset flow and price momentum metrics that indicate which sectors of the S&P 500 are under-invested or over-invested, and how to profit from these conditions.

In a report to subscribers on December 1st, we pointed out that the percentage of sector bet-related assets being allocated to the Consumer Discretionary sector had risen above their 63-day moving average, indicating an emerging new trend of quarterly expansion that suggested a new opportunity to overweight the sector.

Here is one of the charts from our December 1st report.

From Asbury Research's December 1st Keys To This Week report

From Asbury Research’s December 1st Keys To This Week report

The next graph shows that Consumer Discretionary has been the top performing sector over the past 3 months, and has also outperformed the S&P 500 by 5.5% during this period.

Sector SPDR Performance: Past 3 Months

Select Sector SPDR Performance: Past 3 Months

The next chart, updated through the end of February, is our own metric that shows Consumer Discretionary is currently the most over-invested sector of the S&P 500, comprising 9% of all ETF-related sector bets compared with just 5% historically.

Over-invested/Under-invested Sectors Through February 2014

Over-invested/Under-invested Sectors Through February 2014: Asbury Research

This chart warns that, despite recent outright and relative outperformance, this profitable investment idea may be getting “played out” and vulnerable to upcoming weakness/relative sector underperformance.

Our latest sector-related research can be found in our weekly Keys To This Week report, our monthly Sector Watch report, and in Asbury Alerts when there is a directional change in our model.

 Asbury Research Subscribers: Login to the Research Center to view our latest research, which includes more in-depth information and corresponding charts and data pertaining to US market sectors and our sector rotation model.


Correction Protection Model: Performance Update

The table below includes newly-updated, more comprehensive performance data through December 2014 for our “Correction Protection Model” (CPM).

We back-tested the model from 2007 forward during a period that includes uptrends, downtrends, and sideways trends.  It has been running in real-time since September 2013.

Key Features:

  • Protects investors against market declines
  • without sacrificing performance under a variety of market conditions
  • while reducing volatility of returns.

Asbury Research’s Correction Protection Model (CPM)

Asbury Research's Correction Protection Model

click on table to enlarge

About CPM:

  • The model utilizes 4 quantitative inputs.
  • The model uses the S&P 500 as a proxy for the market.
  • The model is either long or neutral: no short positions, leveraged longs, or hedging via derivatives.
  • The model was designed to: 1) be in the market as much as possible, 3) exit on meaningful declines, and 4) quickly re-enter as soon as a positive trend has been reestablished.
  • Since 2007, the model has been in the market 74% of the time
  • Since 2007, the model has averaged 3.9 signals per year or approximately 1 per quarter.

Click Here for more charts and information pertaining to the Correction Protection Model.

 


Which investors were ahead of the “Oil Price” decline?

Published February 19th 2015 by Harvest (HVST.com), a site where hedge fund managers and investors can post investment ideas and share their views.

Learn more about Harvest according to Business Insider.

Which investors were ahead of the “Oil Price” decline?

Yesterday, The Daily Crop revisited how Highland Capital took advantage of the move in oil prices, going long airlines before the drop in oil prices, and becoming bullish on the MLP space at new lower prices. Of course, plenty of other investment firms made calls on oil as well. Let’s look at a few:

John Kosar of Asbury Research is no stranger to large technical prices moves either. Back in August 2014, Kosar explained how Asbury caught the first leg down in oil from $112 to $103, and why they though it wasn’t over yet. Yes, $103 was not the low… Good call Mr. Kosar.

While Cathleen Rittereiser may not be an oil expert herself, Harvest was lucky enough to see the results from her recent Think Tank, where Rittereiser hosted a panel of Energy experts and asset managers who gathered to learn, apply and brainstorm the opportunities and implications of the Energy Revolution in a workshop organized by Uncorrelated, LLC. The Report from The Investment Lab: High Powered, The Energy Revolution documents the results, and recaps the experts’ remarks.

continued>>>

Asbury Research Subscribers: Login to the Research Center to view our latest research, which includes more in-depth information and corresponding charts and data pertaining to US market sectors and our sector rotation model.


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