Research Excerpts

Where Are US Stocks Headed In 2014?
Watch Japan.

Posted on: Thursday, December 26th, 2013

Having a global scope, and understanding which financial asset prices are currently correlated to one another, are two critical components of what we do because it simply gives us more criteria/inputs with which to determine upcoming direction in the US financial markets.

The following (green highlights) is a brief excerpt and a chart from our December 19th What We’re Watching Today report, entitled Emerging Secular Breakout In Japanese Stocks? (access requires subscription).

What We’re Watching Today, one of 8 different reports that we produce for Asbury Research subscribers throughout the month, is a quick, typically pre-market-opening report that we use to identify important and often actionable changes in current market conditions. These reports can focus on anything from a key support or resistance area being tested or broken in an influential financial market, or a current indicator extreme that has historically preceded important price reversals. These observations and accompanying charts are taken directly from our dynamic watch list of between 100-150 key price and asset flow-related charts that we review first thing every morning — to identify emerging new investment opportunities for you.


Excerpt From: What We’re Watching Today
Asset Class:
Global Stock Markets
Topic/Title: Emerging Secular Breakout In Japanese Stocks?
Date: December 19th, 2013

The green highlights on Chart 2 below, which is a newly-updated version of one that appeared in our December 4th report, points out that the Nikkei 225 has now gapped above its 17-year secular downtrend line as of today’s session in Japan.

Nikkei 225 Index & 1996 Secular Downtrend

Nikkei 225 Index & 1996 Secular Downtrend

Today’s gap above higher in the Nikkei 255 Index suggests that a major bullish trend change is emerging in Japanese equities. However, the index must spend considerably more time above this trend line, currently situated at 15,732, to help confirm this.

Moreover, the tight and stable positive correlation between the Nikkei 225 and the S&P 500 at various intervals since 2009, most recently +77% since October, suggests that, countertrend corrections aside, an emerging bullish secular trend change in Japanese stocks is also indirectly positive for the US market, overall, during 2014.

continued…


The Nikkei 225 has already risen by an additional 2% during the 7 days since our December 19th report was sent to subscribers.  During the same period, the positively correlated S&P 500 has risen by 29 points or 1.6%.

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