Research Excerpts

Recapping Our Key 2011 US Stock Market Calls

Posted on: Tuesday, December 13th, 2011

With only about 2 weeks left in the year, we are starting to look back over our 2011 directional calls on the US stock market for the purpose of updating our annual performance.  (You can view our 2010 performance here.)

2011 has been a particularly challenging year for us simply because the S&P 500 never ventured too far away from its 2010 closing level — it only rose by a maximum of +8% from unchanged on April 29th, and only declined by a maximum of -13%  from unchanged on October 3rd.  For perspective, SPX rose by as much as 22% from 2009’s closing level during 2010.

Since our approach is to be strategic to the quarter (looking to forecast an upcoming 3 month or larger move) and tactical to the month (looking to time our entry into that quarterly move within the upcoming several week period), it is tougher to capture returns when the market does not give you those broad quarterly moves to participate in.

Nevertheless, we did manage to get in front of some important market turns this year.  The following chart references 5 key market calls that we made this year, with the details of each call including: 1) the date, 2) the actual text from the research report (in quotes), and 3) the market’s subsequent reaction (in blue) detailed in the text below.


  1. January 12th 2011: Near Term Bullish But Beware Of February Decline. Our near term bias on the US stock market turned positive on December 6th. However, most every market metric that we track is currently at an extreme level that has historically coincided with or led one to several month US broad market declines. At least some of this upcoming decline is likely to take place during February.”
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    What The Market Did:
    The S&P 500 first rose by 68 points or +5.3% into the 1344 February 16th high before declining by 95 points or -7.1% into the 1249 March 16thlow.

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  2. March 30th 2011: Near Term Bullish But Watch For A Late April Top.  The latest data suggest favorable conditions for the mid March rebound in the US stock market to continue on a near term, week-to-week basis – perhaps through late April.”
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    What The Market Did: The S&P 500 rose by 49 points or +3.7% into the 1371 May 2nd high.
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  3. May 16th 2011: Intermediate Term Bearish Through Q2, Into Q3.  “For the past month or two we have been saying that downside risk exceeded upside potential in the US stock market.  A failed chart pattern in the Paris CAC-40 indicates that at least a near term top is in place in the French stock market at its recent highs.  The tight 20-year positive correlation between the CAC-40 and the S&P 500 implies that a similarly-important peak is also emerging here in the US.  Looking out over the next few months, intermediate term metrics establish favorable conditions for what appears to be an emerging US stock market peak to extend through Q2 and potentially into Q3 2011.
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    What The Market Did: The S&P 500 actually peaked on May 2nd (see #2 above), and then declined by 241 points or -18% into the 1102 August 9th low.
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  4. August 10th 2011: Look For A Market Bottom Here.  “The current sharp decline in the US stock market is unlikely to continue appreciably further from here, if at all, without at least a multi-week corrective rebound first.  The common denominator of all the metrics in this report is indications of investor panic — which history tells us is precisely when investors should be buying.  Although current market conditions show the potential for one more eventual leg lower (perhaps during September) before the May US stock market decline runs its course, investors may consider putting some capital to work now, at these levels, in order to participate in whatever type of rally — either corrective or directional — that emerges this month.”
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    What The Market Did:
    The S&P 500 actually bottomed one day earlier, at 1102 on August 9th , and then quickly rose by 129 points or %11.7% into the 1102 August 31st high.  Note that the S&P 500 did indeed make one short-lived move to new lows on October 3rd and 4thbefore beginning a sharp bullish reversal into late October.

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  5. October 3rd 2011:  Intermediate Term Bullish From Here. “Despite last week’s decline, a compelling list of intermediate term indicators have historically preceded 1-2 quarter US stock market bottoms.  These data suggest that any market decline that emerges from here is likely to be temporary, and likely to lead into a more sustainable advance.”
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    What The Market Did:
    The S&P 500 actually bottomed a day later, at 1075 on October 4th, before rising by 218 points or +20.3% into the 1293 October 27th high.

Thanks to our subscribers for making 2011 another enjoyable and successful one for us.  We hope that our research allowed you to participate in the limited amount of invest-able price moves that the market gave us this year.

Interested investors can learn more about our investment research, including sample reports and client testimonials, right here on our website, and can get subscription information by emailing info@asburyresearch.com or by calling 224-569-4112.