Research Excerpts

The Key Indicator To Watch This Week

Posted on: Friday, April 10th, 2015

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.

continued…


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.