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US 10-Year Meets Our May 2014 “2-10% to 2.05%” Target

Back on May 16th of this year with the yield of the US 10-Year Treasury Note at 2.51%, John Kosar appeared on CNBC’s Closing Bell to say that he was looking for a deeper decline to 2.40% by the 3rd Quarter after which — if 2.40% was broken — would clear the way for an eventual move down to the 2.10% to 2.05% area.

The 10-Year subsequently declined to 2.40% by August 15th, and met our 2.10% – 2.05% yesterday, December 16th, via a 2.07% closing yield.

You can view John’s May 16th CNBC appearance by Clicking Here.

Asbury Research subscribers can view our November 26th report, entitled US Interest Rates Outlook For December & Q1 2015, by logging into our Research Center.

Interested professional investors are welcome to contact us via email at sales@asburyresearch.com or by phone at 1-888-960-0005 to get further information about us including pricing and services, and to request trial access.

Click Here to view our recently updated performance data.


8 Reasons To Make Us Your Investment Research Provider In 2015

  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 a more of an intermediate term price trend.

  4. Comprehensive Macro Scope:

    We are not bottom-up stock pickers, but instead utilize an integrated 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 global and emerging stock markets. 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 sectors based on ETF asset flows, then 2) wait for asset flows to support a move back towards historical norms, and finally 3) utilize price momentum-based metrics to confirm that the expected price move in the asset is underway.

  7. Performance:

    Our proprietary trend model for the US stock market has captured 1,233 basis points in the S&P 500 from 2007 through December 4th (+87%), almost doubling the S&P 500’s 649 basis point rise (+46%) during the same period, with significantly less volatility and without using any leverage, short positions, or derivatives. Our model only has 4 moving parts and is binary — either in the market or out of it — outperforming by simply being in it when it’s going up and out of it when it’s going down.

  8. Our Clients Love Us:

    “Asbury Research should be a key component in any professional money manager’s resources. Asbury provides excellent charts/analysis, in a timely fashion that clearly frames the pertinent price ranges for major markets, equities and bonds. Their equity sector calls are aggressive, forward looking and lead most others. Asbury identifies the specific key element(s) of the current market environment, simplifying the investor’s task in getting ahead of upcoming moves.”

    Private Wealth Manager, Morgan Stanley, New York

You are receiving this email because you have previously expressed an interest in our investment research.  We’d like to earn your business by helping you to get in front of emerging investment opportunities to become more profitable and, perhaps more important, to get you out of the way when the market is turning south.

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 about us including pricing and services.

Act Now! Special end-of-year discounted pricing until December 31st, 2014.


When To Overweight Energy / Buy Oil?

In our June 4th 2014 blog posting, entitled Oil Prices: Smart Money Skeptical At $103 Per Barrel, we republished a chart and some analysis from a recent premium report that showed commercial hedgers were holding a near record net short position in NYMEX crude oil futures.  We said that this represented an aggressive bet by the smart money in the oil business, companies that owned the cash commodity either in the barrel or in the ground, that oil prices were over-valued and due for a significant decline.

Crude oil prices subsequently peaked 3 weeks later, on June 25th, and have since declined by $33 per barrel or 34% into this week’s lows.

Before that, in January, our in-house model showed that just 10% of ETF-related sector bets were being allocated to the Energy Sector versus 20% historically, per the chart below.

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Chart 1: Data though 12-31-2013

This metric told us that the Energy Sector was severely under-invested and thus amid favorable conditions for an upcoming 1-2 quarter period of relative sector outperformance, as well as probable coincident strength in energy related assets like crude oil prices.  The big question, though, was “when?”. 

Trying to pick a bottom in a declining, under-loved asset is dangerous business because, if your timing is wrong, you can get run out of the trade before it ever has a chance to become profitable.  We addressed this obstacle with another in-house metric that indicated when investor assets actually started to move back into Energy, in lieu of other sectors.

The next chart, which plots the daily relative performance of the Energy Sector SPDR ETF (XLE) versus the S&P SPDR ETF (SPY) in the upper panel and the daily percentage of ETF sector bet-related assets allocated to Energy in the lower panel, between October 2013 and October 2014, shows that the day-to-day percentage of these assets started to expand back above their 63-day moving average in early March.  This indicated that a new quarterly trend of expansion was beginning.

Chart 2: Daily % Of Sector Bet Assets Allocated To Energy

Chart 2: Daily % Of Sector Bet Assets Allocated To Energy

This, along with other components in our model, moved it to to an overweight status in early March that allowed us to capture 11% of relative sector outperformance by late June.  Then, when the daily percentage of assets invested in Energy contracted back below their quarterly moving average in July — which corroborated the big bearish bet that the smart money commercial hedgers had made on oil prices earlier in the month per our June 4th blog postingour model exited the overweight in Energy and avoided the nasty trend of relative underperformance that followed.

The next chart, which is the current version of Chart 1 above updated through the end of last week, shows that the percentage of sector bet-related investor assets allocated to Energy has contracted back to just 11%, which puts it very close to the 10% extreme reached at the end of Q4 2013.  This suggests that another opportunity to overweight the sector and to buy crude oil may be emerging.

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Chart 3: Data through 11-28-2014

Once again, however, the key is to not be the first one in a new trade to overweight the Energy Sector because that is where all of the uncertainty and most of the risk is.  We’d rather let someone else be the pioneer and try to pick that bottom, while we wait for enough positive asset flow to come back into the sector to support and sustain an overweight position, and potentially to signal a bottom in related assets like oil prices.

The purpose of these blog postings are to display, discuss, and explain our approach to trading/investing in financial assets, which utilizes both quantitative and technical metrics to help professional investors manege risk and improve performance.  Our proprietary trend model for the S&P 500 has doubled the performance of SPX since 2007 while significantly avoiding drawdowns.

Asbury Research subscribers can get more data and analysis on the Energy Sector and oil prices via our recent premium report, entitled Crude Oil & The Energy Sector: Opportunity Or Liability?, by logging into the Research Center.

Interested investors can get subscription information by clicking here or by calling 888-960-0005.


APPL Key To US Market Direction

The following report, published on October 22nd (green text below), pointed out what we believed was an important bullish reversal in influential Apple Inc. (AAPL) and discussed its bullish implication for both the stock itself and the NASDAQ 100 (NDX) and broader S&P 500 (SPX).

Since that report a a month ago:

  • AAPL has risen by  $16.30 per share or 16%
  • NDX has risen by 314 points or 8%
  • SPX has risen by 130 points or 7%

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

View our latest appearances in the financial media by clicking here.

Interested investors can get subscription information by clicking here or calling 888-960-0005.


Research Report: What We’re Watching Today
Date: October 22nd, 2014
Asset Class: The US Stock Market
Title: Tuesday’s Rebound In AAPL Bodes Well For Q4

Conclusion, Investment Implications, Strategy

Yesterday’s 3rd Quarter earnings-driven spike higher in Apple Inc. (AAPL) has negated the bearish implications of its mid October breakdown, and now suggests that the stock’s larger July 2013 advance is resuming. If this is indeed the case, AAPL’s positive correlation to the NASDAQ 100 (NDX) indirectly suggests that this market leading index, as well as the broader US market, may also be resuming their larger bullish trends.

The US stock market still has some headwinds to overcome including weakness in Europe, investor fear/apprehension according to an elevated CBOE Volatility Index (VIX) and widening corporate bond spreads, and a lack of near term bullish conviction according to the latest ETF asset flows. However, this strong bullish reversal in influential AAPL adds to several already favorable metrics including too-bearish investor sentiment data, washed out market breadth, technically oversold conditions, and positive November-December seasonality, all which collectively indicate the likelihood of a 4th Quarter recovery in the US stock market.

Analysis and Rationale

Beginning in our October 16th report entitled The US Stock Market Decline: How Much Deeper? and in subsequent reports since then, we have been displaying and discussing a breakdown from 6 weeks of sideways congestion in Apple Inc. (AAPL) that had initially targeted a 6% decline to $92.00. The green highlights in Chart 1 below show that Tuesday’s (October 21st) earnings-driven spike higher in the stock carried it above the upper boundary of this congestion area, which suggests that its recent pullback is over and its larger bullish trend is resuming.

Chart 1

Chart 2 below takes a bigger picture look at APPL since 2012 and shows that Tuesday’s spike higher positions the stock back above its $100.75 September 2012 benchmark high, which is the major overhead resistance level that initially caused the sideways congestion since September and the mid October breakdown from it.

Chart 2

Tuesday’s rally, as long as its holds above a band of underlying support between $100.75 and $100.07, the latter which is AAPL’s 50-day moving average (a minor trend proxy), clears the way for significantly higher prices in the weeks and potentially months ahead.


We have been providing professional investors with a forward-looking, independent forecast of the US financial markets since 2005. Find out more about us here.


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

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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.


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