We occasionally send one of our current reports to our Asbury Research blog subscribers so they can see what Asbury Research subscribers receive in real time. Our Monday March 28th Keys To This Week report for US market sectors is included below, which utilizes our own proprietary investor asset flow metrics that indicate where investor dollars are going — and where they came from. Investor asset flows are one of the only metrics that actually lead price.
We also produce separate Keys To this Week reports on Mondays for the US stock market, US interest rates, and commodities (ETFs) and the US Dollar, in additional to the 8 additional reports we publish throughout the month.
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Keys To This Week
Keys To This Week, March 28th 2016:
US Stock Market Sectors
Posted on: Monday, March 28th, 2016
The green highlights in Table 1 below show that the biggest inflow of investor assets during:
- the past 1 week and 1 month periods went to Technology.
- the past 3 month period went to Utilities.
The red highlights show that the biggest outflows during:
- the past 1 week period came from Energy.
- the past 1 month period came from Health Care (4th consecutive week).
- the past 3 month period came from Financials.
Chart 1 below shows the historic daily average distribution of investor assets in the 9 Sector SPDR ETFs since June 2006.
Chart 2 below displays the current distribution of these assets through March 24th.
The green highlights show the historically most under-invested sectors are currently, in order of severity, 1) Materials, 2) Energy and 3) Utilities. The red highlights show the historically most over-invested sectors are 1) Consumer Discretionary, 2) Health Care and 3) Consumer Staples.
Table 2 below lists our current market calls for relative outperformance (green background), underperformance (red background) or market performance (blue background) versus the S&P 500 in the sectors of the US broad market index as originally represented by the Select Sector SPDR ETFs. The table includes the date that we initiated the call, relative sector performance since then, and in the rightmost column Asbury’s performance relative to the direction of the call.
This week our model shifts to outperform in Technology (from market perform) and to market perform in Health Care (from underperform to capture +3%) and Energy (from outperform to capture +3%), while retaining an outperform bias in Industrials (March 21st) and Materials (February 29th) and an underperform bias in Consumer Discretionary (January 11th).
More charts and detail pertaining to our investor asset flow- and momentum-based metrics for US market sectors is available in the March 9th Sector Watch report.
Investor Asst Flows: Positive For Materials, Technology
The green highlights in Chart 3 below show that the assets invested in the Materials Sector SPDR ETF (XLB, lower panel), as a percentage of assets currently invested in all 9 Sector SPDR ETFs as shown in Chart 2 above, began expanding in late January and have continued to do so through the end of last week.
As long as the trend of quarterly expansion in these assets remains intact, as indicated by the black line’s position above the red 63-day moving average, we will expect the current trend of relative sector outperformance versus the SPDR S&P 500 (SPY) to continue.
The highlighted circle in the lower panel of Chart 4 below shows that the the percentage of ETF sector bet-related assets allocated to Technology has risen above its 63-day moving average over the past week, suggesting an emerging trend of quarterly expansion that the green highlights show previously fueled relative sector outperformance versus SPY between October and December 2015.
As long as the recent trend of quarterly expansion in assets continues, it is likely to fuel another period of relative outperformance by Technology.
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