Asbury Research Director of Research John Kosar is a sought-after commentator for a number of broadcast, online and print publications.
2010
NEW!Reuters(January
21, 2010) Wall St's rout seen as onset of correction With major indexes breaching key
technical support levels on Wednesday, market technicians said Wall Street was
likely to see the onset of a long-anticipated correction following a 70 percent
run-up in the benchmark S&P 500 from March 2009. "This is the beginning of
a correction. It's been brewing for months," said John Kosar, market
technician and president of Asbury Research in Chicago. "There's more risk
on the downside than opportunity on the upside here until we get a correction."
According to Kosar, the latest downdraft could potentially drive the S&P 500 to
1,100-1,084, a level which should potentially spur new buying. But if the buying
failed to materialize, the index could then head down 10 percent or more from
the recent high. "The market is overextended by almost every metric that
we look at, which makes it vulnerable to some kind of a pullback, and more than
one that will last two days," added Kosar.
2009
Reuters(December
9, 2009) Dollar relationship with risk assets on the rocks Markets have been here before. Over the past five
months, the dollar has benefited from stronger figures on several
occasions, only to return quickly to its more familiar pattern of
falling on good economic news. John Kosar, president of
Asbury Research in Chicago, said he does not anticipate a
fundamental shift in the relationship until the dollar index sees a
sustained bounce above its 50-day moving average. The dollar
index closed above this average on Friday for the first time since
April. Support at this level would suggest revaluation of the dollar.
"The dollar index would have to rise above its 50-day moving average
to indicate that a near-term bottom is in place. Unless that happens,
the advance in U.S. equity prices is likely to continue," Kosar
said.
Barron's Online(December
2, 2009) Stock and Bond Investors See Different Markets Ahead Over the past decade, stock and bond prices have
generally moved in opposite directions, meaning that share prices and
bond yields have moved together, both higher and lower. Both share
prices and yields set major bottoms in mid-2003 and major tops in
mid-2007, give or take a few months. And while most major stock
indexes bottomed again in March 2009, the bigger stocks on the Nasdaq
bottomed in November 2008 -- with bond yields. This important
relationship held true this year until June, when bond yields peaked.
One month later, as yields moved lower, stocks began their current leg
up. John Kosar, director of research at AsburyResearch.com,
said that the 70% rally in the stock market since March tells us that
stocks think the economy looks promising. However, the decline in bond
yields since the summer tells us that bonds do not agree.
The Wall Street Journal Online(November
3, 2009) Amid Buffett Bump in Transports, SOX Moves Lower Warren Buffett’s purchase of Burlington Northern Santa
Fe is giving the Dow Jones Transportation index a fillip. But
adherents of Dow Theory — short version, that transports take what
industrials make — like Raymond James’ Jeffrey Saut say that today’s
spike isn’t really telling us much on the future direction for stocks.
Perhaps more telling is the action we’re seeing in the The
Philadelphia Semiconductor Index, or SOX, which is down about 1.5%.
Within the tech universe itself, economically sensitive semiconductors
tend lead the pack. And since many look for stock market leadership
from the broader tech-stock area, technicians argue that it makes
sense to watch the SOX for hints about where the markets might go
next. As we speak, the SOX is below 293. In a research note last
week technician John Kosar of Asbury Research said that if the
SOX couldn’t hold above 300, it’ll likely trade down to about 275.
Some technicians would look at such a move as bad news for the broader
markets.
The Wall Street Journal Online(October
29, 2009) SOX Off: The Tech Leader Flashing
Yellow? The Nasdaq 100 leads the broader stock markets. And
within the tech universe itself, economically sensitive semiconductors
tend lead the pack. If that’s true, it would make sense to watch the
The Philadelphia Stock Exchange Semiconductor Index for a sense of
where the markets might go next. Often called by its ticker
symbol, the SOX isn’t portending rosy things for investors. Asbury
Research put out a note on the topic yesterday. "We look for
emerging changes in direction in the SOX as a potential leading
indication of a directional change in the U.S. broad market … positive
divergence by the SOX actually led the March 6th bottom in the SPX and
both indexes rose from there … Now we may have the inverse situation
to what took place in February-March emerging on the charts. This is a
negative divergence between the SOX and SPX — and opposite to what
happened back in February-March." Yesterday Asbury wrote that a
close below 305 would confirm that the SOX had topped out in the
near-term, adding “we are waiting for a close through 301 to further
confirm that a top is in place at 337.” The SOX closed Wednesday
at 300.78.
Dow Jones Newswires (October 23, 2009) Wall St falls on housing data, stimulus jitters The Philadelphia Semiconductor Index (SOX) has led the tech
sector, which in turn has led the market, for much of this year's
rally. It was an especially good indicator of the market's low point
back in March; the SOX hit its lowest point this year at 188.49 on
March 2, exactly one week before the S&P 500 sunk to its 12 1/2-year
low of 676.53. From those lows, the SOX has rallied 73% as of
Thursday's close, while the S&P 500 has jumped 62%. The relationship
has technicians like John Kosar, director of research at Asbury
Research, closely watching the SOX for indications of where the
rest of the stock market may next lurch. He refers to the SOX as a
canary in a coal mine. Right now, it's in limbo. The SOX, which
tracks the performance of semiconductor makers and equipment
manufacturers, has been dancing between a support level of 305 and
resistance level of 337 for the past month, and until it breaks
through one level or another, it's hard to tell which way the broader
market may go. But once it does, the broader market is likely to
follow. The connection likely exists "because the market
collectively is looking for prices to go higher so they want to be on
the fastest horses when that happens, and oftentimes, that is
technology," Kosar said. Kosar noted there are many other
factors investors should keep in mind, including volume, sentiment and
volatility, but he has found that the SOX's performance tends to be
one of the initial signs of where stocks are headed. Once it breaks
through a level of support or resistance, "then you're taking the
market's temperature again," he said.
Reuters(September
24, 2009) Wall St falls on housing data, stimulus jitters The losses put the benchmark S&P 500, which has rallied nearly
60 percent in six months from 12-year lows, on track for its worst
two-day decline in three weeks as investors pummeled stocks across the
board. All 10 S&P 500 sectors fell, led by energy, materials,
financials and industrials. "The housing number today probably
threw some gasoline on the fire," said John Kosar, market
technician and president of Asbury Research in Chicago. "It's not
only that the recovery is fragile, but the other important story is
just how far the market has come, so fast. The Fed statement was a
little bit sobering."
CNN Money(September
15, 2009) The planes, trains and automobiles rally The upbeat outlook from FedEx could be a good omen for the
broader economy since it may mean that consumers and businesses are
becoming more willing to loosen up their purse strings. John
Kosar, director of research with Asbury Research in Chicago, said
there are signs that this may be happening in other areas of the
financial markets as well. "A lot of people look at copper as an
economic barometer since rising prices could mean that more goods are
being made. The performance of the transports is letting you know if
goods are being shipped. So that's why they have significance and
meaning," he said. The better-than-expected
retail sales for August also appears to confirm that there is a
nascent consumer recovery.
CNN Money(August
28, 2009)
Stop The Market Insanity "There are two ways you can have a correction. Stocks actually
go down or they move sideways over time," O'Rourke added. "I think the
market is going to go sideways. Investors may sell speculative
companies and rotate into more defensive blue chips." John
Kosar, director of research with Asbury Research in Chicago, isn't
buying this argument though. He said that if investors start to look
more at health care companies and stodgy consumer giants like
Coca-Cola (KO,
Fortune 500) and Procter & Gamble (PG,
Fortune 500), it's probably a sign that they are losing confidence
in the possibility of a robust economic recovery. "If people
start pouring into health care and other defensive sectors, they are
doing it for a reason. They are looking for a place to hide," he said.
Kosar said many big institutional investors have been buying stocks
because they have to chase momentum. In other words, they are fearful
of what their returns will look like if they sit the rally out and may
not be convinced that a sustained rebound is in the cards. So if there
is a sell-off, it could be painful. "A lot of money managers have been
buying stocks not because they are in love with the market and think
that things are hunky-dory and we're going back to the 1990s," Kosar
said. "All that means is when the inevitable sell-off comes, you will
get a lot of people looking for the door at the same time."
The Wall Street Journal Market Beat(August
20, 2009) S&P
Tests Resistance Above 1000 Again! Can it Hold the Line? Whatever the reason, investors would do well to watch closely
when the S&P reaches 1000 and above. “This is an inflection point and
the market has to decide whether the economy is strong enough to
support stocks making another leg higher from here,” said John
Kosar, director of research as Asbury Research.
The Wall Street Journal Market Beat(August
20, 2009)
Pump up the Volume: We Know it’s August, But C’mon. Market seers say they’re keeping a close eye on evaporating
volume, which — when triangulated with other market metrics — can be a
bearish signal. “Low volume when prices have been generally going
higher, to me that’s a red flag,” said John Kosar, director of
research at Asbury Research. He’s quick to stress that you
shouldn’t necessarily see low volume as the time to sell out of your
positions and stuff cash into your couch cushions. “It’s just a near
term indication that has negative implications.”
The
Guardian UK(July 29, 2009) Wall St correction looms large as rally frays
The other worrying signals about the stock market's short-term outlook
include a jump in the percentage of New York Stock Exchange stocks
trading above their 200-day moving average to the highest levels since
February 2007. Through Friday, 85 percent of NYSE stocks were above
their 200-day averages, according to John Kosar, market technician
at Asbury Research in Chicago. That is traditionally a sign of the
market's relative strength, but it could also invite the bears to try
to dislodge the bulls. "These data suggest that U.S. equity prices
are unlikely to continue appreciably higher from here without at least
a one-to-two-month corrective decline first," said Kosar. For now,
though, the Wall Street adage -- "the trend is your friend" -- might
just embolden the bulls a bit longer. The question is for how long?
Reuters USA(July 8, 2009) Long-awaited correction confronts Wall Street
For two months U.S. equities have defied expectations for a
correction, but charts show that major averages are finally on the
cusp of their first significant pullback since the start of the March
rally due to worries about economic growth. "This is a start of
a correction," said John Kosar, market technician and president of
Asbury Research in Chicago. "The market has decided that for
now the October 2007 cyclical downtrend is still in play. It doesn't
mean we have to go back under the lows, although that is possible."
Welling @ Weeden(June 26, 2009)
access requires subscription AcuteObservations: Asbury Research's Keys To This
Week, June 22 2009 "This Week, all of
our Near Term factors are in the Negative category except one -- a
bullish chart pattern in the PHLX Semiconductor (SOX) Index. However,
the SOX must remain above 259 this week for the bullish implications
of this pattern to remain valid. On the other hand, near term market
momentum turned negative (bearish) in the major U.S. indexes (S&P 500,
Dow Industrials, NASDAQ 100 and Russell 2000) last week -- which
indicates that a near term top is in place in the US stock market at
its recent highs. A decline below 259 this week in the SOX would
further confirm this top and clear the way for more weakness in the
market leading Technology Sector."
Barron's Online(June 17, 2009) Will Commodity Investors Have Summer Fun?
John Kosar, director of research at Asbury Research, found that
over the past 30 years, oil prices are exceptionally strong between
April and September with May providing the best monthly return.
Indeed, this May, crude oil gained a whopping 29%. However,
despite the strong spring and summer performance, the market does tend
to take June off. The average loss for the month was 0.2% so it really
serves as a rest stop for the bulls. Once June ends, however, the
seasonal pattern points to three more months of solid gains.
Fast Money Rapid Recap(June
17, 2009) Correction On The Horizon?
According to John Kosar of Asbury Research although the DJIA
took out its May highs the Transports has not. “That’s a red flag.
Something is not right. Often this kind of pattern signals a
pullback,” he said on Fast Money's Halftime Report. Is a
correction on the horizon? Kosar thinks it is.
Fast Money Rapid Recap(May 27, 2009) BEHIND THE MONEY: Stock Rally in Bond Market's Hands
The fear is that higher yields could snuff out this stock market rally
by making it more expensive for the government to borrow, as well as
for consumers, whose mortgage rates are pegged to the 10-year
Treasury. Also, higher yields could be foreshadowing a troublesome
spike in inflation. However, there is another side to this
argument. In the past, higher yields signaled increasing economic
activity. In fact, the S&P 500 and the yield on the 10-year Treasury
have an 86 percent positive correlation since December 2006, according
to John Kosar, director of research at Asbury Research and a
guest on the
Fast
Money Half-Time show today.
Reuters(May 20, 2009) Treasuries may pop if supply fatigue fades
The U.S. government bond market may be poised for a summer rally after
a harsh spring, when it was beaten up by an onslaught of supply.
The Treasuries market has entered the time of year for its most
bullish stretch. May, June and July have typically been strong months
for bonds, coinciding with a seasonal weakness in stocks, known as
"sell in May and go away" in Wall Street parlance. Going back to
1957, Treasury prices tend to post price gains during this part of the
year, according to John Kosar, director of research at Asbury
Research in Chicago. "We are looking for a bounce in
Treasuries if based purely on seasonals," he said. "These are
recurring patterns."
The Chicago Sun Times(May 3, 2009) College savings plans hit hard
The month just concluded was quite positive for stocks. April was Wall
Street's best month in nine years, based on performance of the
Standard & Poor's 500 index. It's a favorable sign for the economy as
a whole, as stocks usually rally before economic conditions improve.
But the issue now is whether to heed that old adage, "Sell in May and
go away." It implies that stocks decline during the summer and don't
begin to advance until the stores stock Halloween merchandise. It's
not just a convenient excuse to spend the warmest months of the year
at the beach instead of on your broker's Web site. Asbury Research,
investment trend analysts in Lake in the Hills, said a review of data
going back to 1957 supports the maxim. Asbury found that April
is the seasonally strongest month for the S&P 500 over the last 51
years. "May kicks off a five-month period of acute seasonal weakness
that runs through September" and includes five of the six weakest
months during the year, Asbury reported.
Welling @ Weeden(April
17, 2009)
access requires subscription Caution Flag:
Over-Investment In Tech
Sector Signaling Correction Relative
underperformance by this market-leading sector has historically led
most every US broad market decline in recent history. Chart 2
(not shown) below displays the Technology Sector SPDR ETF (XLK) ETF in
the upper panel, and our Rydex Technology Ratio in the lower panel.
The Rydex Technology Ratio is the total assets invested in the Rydex
Technology, Telecom, Electronics and Internet Sector Funds divided by
the combined total assets invested in all 18 Rydex Sector Funds. It
indicates how much "sector bet money" is being allocated by investors
into Technology. The red vertical highlights between both panels show
that these investors are at a multi-year over-invested extreme on
Technology that has previously either coincided with or led most of
the important peaks in the XLK since 2003.
The Wall Street Journal Market Beat(April
10, 2009) The Long and Short Of It So what’s an active investor to do? Strategists say
that at times like this there’s a need to combine long and short
positions, if only to protect oneself against dramatic shifts in the
market. Volatility has receded from its panic-level highs in the
fourth quarter, but it remains high, as investors continue to expect
significant gyrations in the market. “It’s not just a matter of
stocks being cheap and saying, ‘Let’s buy them and go to Florida,’”
says John Kosar, director of research at Asbury Research. “You
can’t do that anymore – too many things are unresolved.” With
that in mind, active traders have been increasingly taking positions
in strengthening stocks, such as specific financial stocks, while at
the same time offsetting those bets with bearish positions in
sector-specific exchange-traded funds.
The Wall Street Journal Market Beat(March
23, 2009) Four at Four: Celebrating the Small Stuff The trend in copper prices is particularly
constructive, as they are considered a strong economic barometer. If
they continue to rise, “it will be seen as an intermediate term
bullish indication for both the US stock market and the US economy,”
write analysts at Asbury Research. They point out, however,
that the 200-day moving average in copper prices suggests a bearish
trend – and that copper needs to continue to move higher in order to
turn that bullish.
The Wall Street Journal Market Beat(March 18, 2009) Volume Is Better, But Don’t Expect
a Frenzy
The market experienced several sessions in the months of October and November
2008 in excess of two billion shares on the Big Board, and while it seemed like
a bottom for some time, it did not turn out to be the case. Days like this
“point out an inflection point,” says John Kosar, head of research at Asbury
Research in Chicago. “Just because volume spikes, it doesn’t mean everything
is cool and then you can buy stocks and go away until next year. It means in the
near-term, you might get a bounce, or already have seen one.”
The Associated Press(March 14, 2009)
There's no formula to figure out if this latest rally will stick. But market
analysts are watching closely for signs that the worst might be behind us, and
they say some good signs are starting to pop up. "There are little subtle
things that have happened that are good — good enough to see that market is
trying to establish a near-term bottom," said John Kosar, market technician
and president of Asbury Research in Chicago. "But it's way, way, way too
premature to try to make an argument that this is 'The Bottom.' "
Long Beach
Press-Telegram(March 14, 2009) It's counterintuitive, but
Americans should be happy oil prices aren't falling anymore. After massive price
drops alongside stocks over the past several months, crude oil has jumped 16
percent in the past three weeks. Crude oil and copper - which has risen 17
percent in three weeks - tend to be economic barometers, said John Kosar,
president of Asbury Research in Chicago. That's because if the cost of
industrial metals and crude oil are rising, it means traders see demand
trickling back. Growing demand means increasing industrial production.
Reuters (USA), Javno (Croatia), Planet (Slovania), Handelsblatt
(Germany) (March 12, 2009)
In just three days, the Standard & Poor's 500 is up 11 percent. But for the year
so far, the S&P is still down 16.9 percent. Since its October 2007 record high,
the index is still off 52 percent. "It's way too early to say if this is
the bottom," said John Kosar, market technician and president of Asbury
Research in Chicago. "Over the course of several weeks, you want to see the
market build a base. It's more important that the market holds here and maybe
even churns here instead of it being something like a rocket shooting up."
2008
The Wall Street Journal - Market Beat (September
16, 2008)
The bounce in the Chicago Board Options Exchange volatility index —
which hit 33.70 during the session— suggests that there has been a surge in fear amid all of the day’s issues.
Previous market trouble usually produced this type of reaction in the VIX, which
closed at 30.53 Tuesday. “If we can assume that the market will react to a
similar extreme in investor fear in the same way this time, then it would be
reasonable to expect the S&P 500 to establish a near term bottom anytime between
today and the end of next week,” writes John Kosar, analyst at Asbury
Research.
Welling @ Weeden (September 12th, 2008) Acute Observations:
Asbury Research "This
Week,
there are still a lot of mixed signals in the market, but they appear
to be more of a time frame issue. Combined, they suggest the potential
for a bounce higher into mid-month, followed by more weakness into
lateQ3 / early Q4 which should lead into a recovery through late 2008
/ early 2009. Specifically, near term technically oversold conditions
appear to be tying in to this morning's Fannie and Freddie-related
spike higher in the U.S. stock market which, according to intra-month
seasonal data, could extend into mid month."
continued...
Reuters(September 12th, 2008) Having failed to reach deals to raise desperately needed
capital, Lehman goes into the weekend trying to sell itself or part of
its business. "Investor sentiment is braced for the worst news
possible," said John Kosar, market technician and president of
Asbury Research in Chicago. "When you have extreme circumstances
like we're having now it's very hard to try to figure out what to do
next."
Dow Jones Newswires (August
29th, 2008) For the past couple
of weeks, market participants seemed to shrug off big gains in the
July consumer and producer price indexes, focusing instead on a
slumping economy and tight credit conditions. "This may very well be a
trend that has overextended because of credit crisis-related issues,"
said John Kosar, director of Asbury Research.
Friday, Kosar said investors couldn't ignore data from the Commerce
Department showing a lofty inflation indicator that is closely watched
by Fed rate-setters. Core-personal consumption expenditures, which
exclude volatile food and energy costs, climbed 2.4% in July compared
to the same time a year ago. The Fed's definition of price stability
is a 1.5% to 2% range on an annual basis. Kosar noted that July's
core-PCE reading is also at the "high extreme" of this year's Fed
inflation projections. "There is really no more room for these numbers
to rise any further without the Fed having to concede that
inflationary pressures are becoming even worse than they thought
possible.
The
Guardian - UK(August
25th, 2008) The
spread between 10-year Treasury inflation protected securities and
conventional Treasury yields fell to 2.16 percent, not far from its
multi-year low from a week ago. "Wall Street either believes
there is no inflation problem in the United States, or that the Fed
will not address it by raising interest rates," said John Kosar,
analyst at Asbury Research.
Welling @ Weeden(August
22nd, 2008) GuestPerspectives(access
requires subscription) July PPI: Spread Between Inflation,
Interest Rates At Extreme
Reuters Business & Finance(August
20th, 2008)
Financial traders now see just a one-in-three chance that the Fed will raise
rates to 2.25 percent by year end from the current 2 percent. As recently as
July 23, the market was leaning toward a year-end rate of 2.5 percent.
"The market is clearly much more worried about slowing growth and the credit
crisis than it is about any monetary response from the Fed to try to fight
inflation," said John Kosar, analyst at Asbury Research in Chicago.
The Wall Street Journal(August
5th, 2008)
Some analysts believe that the stock market's gains will prove to be
short-lived. "The stock market is range-bound but volatile at the moment, which
tells you that people really aren't sure what to make of the risks out there,"
said research director John Kosar, of Asbury Research in Chicago.
Mr. Kosar remains worried about inflation. He points to recent University of
Michigan survey data showing strong expectations among consumers that the prices
of goods and services will be sharply higher throughout the economy a year from
now. He believes such sentiment could easily become self-fulfilling if companies
desperate to pass along costs interpret consumers' expectations of price hikes
as leeway to actually raise prices.
Dow Jones Newswires (July
28th, 2008) It's difficult to argue that
long-term rates are going down if the Federal Reserve has "already conceded that
inflation is a problem," said John Kosar, director of research for Asbury
Research. Kosar noted that Friday's consumer sentiment report from data
provider Reuters and the University of Michigan revealed a very lofty one-year
inflation forecast, at 5.1% for the second month in a row. At stake for
the Fed, according to Kosar, is its credibility to fight inflation. "The Fed has
stated on numerous occasions that it needs to have credibility," Kosar said
The Wall Street Journal - Market Beat (July
21st, 2008)
The Financial Sector Select SPDRs exchange-traded fund didn’t mark major gains
on the day, but its increase was enough to put it at a close of 20.44, the
highest closing price for that index since June 26, before falling 15% in the
first two weeks of July. Furthermore, the price action in bellwether Goldman
Sachs Group Inc. suggests that investors are
again seeing the financials as a place to go and not run from — for
however long that lasts. Analysts at Asbury Research say the trading in
Goldman of late suggested more bearishness,
but the shares turned last week. “Failed bearish patterns are pretty rare, but
when they occur it indicates that the market has, for whatever reason,
aggressively changed its mind on future price direction,” they write. Goldman
shares ended the day down 1.1%.
Dow Jones Newswires (June 26th, 2008) In their accompanying
policy statement, panel members said that "although downside risks to
(economic) growth remain, they appear to have diminished somewhat."
The FOMC also said that "upside risks to inflation and inflation
expectations have increased." "That's the phrase that
pays," said John Kosar, director of research for Asbury Research.
The Fed clearly implied that it had "shifted from having an easing
bias to a tightening bias," said Kosar. He played down
Thursday's action, which seemed to reflect market expectations that
the funds rate won't budge until this fall. "You're trying
to look at a ripple, instead of a wave. Markets go up and down every
day," Kosar explained.
Forbes.com(June 20th, 2008)
ANALYSIS-Technicians see Wall Street on thin ice NEW YORK (Reuters) - The
technical picture of the U.S. stock market is deteriorating fast,
putting Wall Street on course to test its March lows in the coming
days and it could fall even further. "I think we are at a
near-term inflection point," said John Kosar, market technician and
president of Asbury Research in Chicago. "If there's any more
bleeding from here I think that will point to a re-test of the
first-quarter lows and maybe a breakdown through those lows in the
third quarter."
CNN Money (June 4th, 2008) "The financials have to participate to a degree if you expect
some sort of sustainable rally. Financials are a big chunk of the
broader market," said John Kosar, director of research with Asbury
Research. Kosar said one troubling sign is that one of
the sector's leaders, Bank of America, has taken a notable turn for
the worse. The stock had been mainly trading in a narrow range of
between $35 and $40 since March. But it recently dropped below the $35
level and is now trading at about $32.50. "Bank of America had
been drifting sideways for a couple of months. And when stocks trade
sideways, it indicates investor indecision," Kosar said. "But when a
stock comes out of that range, one way or another, that means
investors have made their mind up." "The fact that one of
the biggest components in the financial sector is heading down does
not bode well for the rest of the group. BofA could be the canary in
the coal mine for financial stocks," Kosar added.
HedgeWorld Blog (May 23rd, 2008) Corrective Lenses Here’s an interesting
oil price blog entry from the folks over at Asbury
Research. They took a look at Occidental Petroleum Corp., using
its stock price as a proxy for oil prices. In April, Asbury’s research
established a $100-per-share upside target for Occidental. That target
was met on May 21. The whole entry is worth reading, but here’s the
meat as I see it:
HedgeWorld (May 20th, 2008)
Credit the Fed for Low Inflation
Bill Gross, chief investment officer at Pacific Investment
Management Co., a bond investment firm in Newport Beach, Calif., is a
champion of this school of skepticism. He has said for years that
government inflation data cannot be trusted. In his view, it’s the
headline inflation and not the core figure that really matters in a
world characterized by globalization and growing appetites for oil,
food and commodities on the part of Asian countries. Taking note of
the apparent benign neglect of the Fed vis-à-vis inflation,
John Kosar, president of Asbury Research in Chicago, said: “The
latest survey-based measures of inflation expectations clearly
indicate that Main Street does not believe that inflation will
moderate like the Fed does, and suggests that Main Street may in fact
have lost faith in the Fed’s ability, or even its willingness, to
fight inflation.”
Forbes (May 8th, 2008) The producer price index on a
year-over-year basis rose 6.9 percent in March, marking the sixth consecutive
month that headline PPI was above 6.2 percent. The last time that producer
inflation held at those levels for six consecutive months was in late in 1981,
when benchmark 10-year Treasury note yields were near 15.75 percent -- well
above the current yield of about 3.90 percent, according to John Kosar,
president of Asbury Research in Chicago.
The Wall Street Journal - Market Beat (May
6th, 2008) John Kosar of the Logic over Emotion
blogsays copper prices suggest reasonable strength in
economic growth. “Although recent price activity in copper has been very
positive lately, we note that it is still in the early stages of this bullish
breakout and not completely out of the woods yet,” he
writes. “We are closely watching the direction of copper prices
from here as not only an indication of copper’s longer term trend, but also a
leading indication of what to expect from both the US economy and US stock
market for the rest of Q2 and into the second half of 2008.”
Barron's (May 1, 2008) Emotional Market Sentiment Survey by Asbury Research April 26: Investor-sentiment measures, as they pertain to the U.S.
dollar, have been uncharacteristically conflicting and inconclusive for most of
this year, indicating uncertainty on the future direction of the greenback,
while establishing its current level as a possible longer-term inflection point.
More recently, however, these sentiment measures have started to come back into
sync...and now suggest that the dollar's recent decline is likely to continue
for the near-term...[yet] this decline should ultimately lead into a much larger
rally in the greenback.
Dow Jones Newswires (April
29th, 2008) A slowing economy was
only one half of what Asbury Research president John Kosar described as a
"two-headed monster." The other half was inflation, and consumers' expectations
for higher inflation, which Kosar said can be a "self-fulfilling prophesy."
Soaring prices for energy and other commodities heightened inflation concerns,
causing investors to substantially pare back rate cut expectations. Given
the inflation threat, Kosar believed fed-funds traders had priced in too much
Fed easing. "We thought the funds contract might be priced toward too much
accommodation," said Kosar.
The Wall Street Journal - Market Beat (April
22nd, 2008) John Kosar of Asbury Research notes on his firm’s
blog that the Dow, having closed above 12768, was a positive signal, and
equities are now in the process of “building a base” for future moves. “The
forward-looking US stock market starting to price in a recovery in the US
economy,” he writes.
Reuters
USA(April
21st, 2008)
"The market is starting to understand that these inflationary pressures are --
as the Fed has said -- going to restrict how much more easing they can do, and
that has pushed prices on the front end of the curve down faster than in the
back end," said John Kosar, president of Asbury Research in Chicago.
Reuters(April
15th, 2008)
On Tuesday, U.S. crude oil futures hit record highs above $113 per barrel.
Separately, a government report on Tuesday showed that U.S. headline producer
prices accelerated to a 6.9 percent year-over-year rate in March. That's the
sixth straight month the year-over-year headline PPI reading has been above 6.2
percent and the last time that happened was in late 1981, Asbury Research
wrote in a note to clients.
Chicago Sun Times(April
13th, 2008) John Kosar,president of Asbury Research, said the intriguing Dow
movements come as the market has gone through months of vacillation as investors
try to decide if the worst of the credit crisis and the economic slowdown are
past. He said another sign that the market could be ready for an advance is that
many measures of trader sentiment are way out on the bearish extreme. To
Kosar, that reminds him of a lesson from his days dealing contracts at
the Chicago Mercantile Exchange. "You look around the pit and when you
see all the traders' positions are one way, the market has to switch. It can't
possibly sustain itself," he said.
Reuters (April
11th, 2008)
The University of Michigan survey showed that expectations of higher inflation
are getting more "sticky." The five-year inflation expectation rose to a median
3.1 percent from 2.9 percent in March. Meanwhile, the 4.8-percent
inflation reading expected over the next 12 months was a 20-year peak, said
John Kosar, president of Asbury Research in Chicago. "If the Fed is as
concerned about these inflation expectations as they say they are, these latest
data should keep them up at night," Kosar said. "Inflation expectations are
already out of control by some measures."
Lipper HedgeWorld (April
9th, 2008)
“We’ve looked at investor sentiment
data and we’re seeing some of the hedge funds more bearish on long-term
Treasuries than they’ve been in years,” said John Kosar, president of Asbury
Research, a Chicago-based research firm, who looks at the direction of the
long-term government bonds. “At the same time, retail investors are very bullish
on long-term Treasuries. But retail investors are notorious for being the most
bullish at market tops, whether you’re talking stocks, bonds or corn flakes,” he
said.
Barron's Online(April
2nd, 2008)
You may be asking: Why the concern that interest rates will climb if the Federal
Reserve is focused on juicing the economy with liquidity? From the fundamental
perspective, the Fed may be acting as economy fixers with interest-rate cuts and
looser borrowing requirements, but Bernanke & Co. are starting to talk openly
about the risks of higher inflation and the need to fight it. So concludes
John Kosar, CMT, of the market analysis firm Asbury Research. Wording
in several recent speeches by Fed members this year has made a reference to
"inflation expectations" and how it will hamper their attempts to cut interest
rates further.
The Wall Street Journal - Market Beat (March
20th, 2008)
Gold futures are losing some of their luster, lately trading at $928.30 an
ounce, a sharp decline from the last close above $1,000, which was just Tuesday,
as the U.S. dollar rallies against the euro, Swiss franc and yen. Asbury
Research’s John Kosar asked today in his blog, Logic Over Emotion Investing,
whether the “collapse in gold” could help the dollar with an
overdue bounce.
Bill Barnhart Column - Chicago Tribune
(March 12th, 2008)
The clearest clue of an impending rebound was the miserable state of investor
sentiment as the week began, said technical market analyst John Kosar of
Asbury Research. All dozen sentiment readings he follows were strongly
negative. For example, nearly 52 percent of investors were bearish in the
latest weekly survey by the American Association of Individual Investors. The
long-term average bearish reading in the survey is 29 percent. "You've had
all investors on one side of the boat," Kosar said. "When everybody is expecting
the end of Western civilization, a piece of good news throws everybody off
kilter."
The Wall Street Journal - Market Beat (March
4th, 2008)
To some, the chip stocks are in danger of dropping further,
as the Philadelphia Stock Exchange
Semiconductor Index was lately traded at 339.34, not far from a 52-week low,
falling through support levels around 352. “These major support levels define an
important decision point for market-leading technology stocks - how these
indexes react will be seen as a key indication
of whether the recent broad market decline in the US will continue, or if a
corrective rebound will occur first,” note analysts at Asbury
Research.
CNBC.com (March 3rd, 2008) Inflation pressures have indeed become a significant issue for
the bond market in a short amount of time and could exacerbate
problems for the consumer and confound the Fed. For example, the
break-even point for the 10-year Treasury inflation-indexed security
-- a widely-followed gauge of inflation expectations -- rose to 2.45
percent at the end of February, matching a high from early November
2007, according Reuters EcoWin. "This means that the
public's inflation expectations, which Fed Chair Bernanke has
mentioned three times since January 17th as being key to the Fed's
ability to continue easing interest rates, have gone from being a
non-factor to a big potential problem in just the past month," said
John Kosar, president of Asbury Research, in a note.
The Wall Street Journal - Market Beat (March
3rd, 2008) John Kosar of Asbury Research says inflation
is getting worse, too. “As much as the Fed is seemingly diverting our
attention away from inflationary pressures as it desperately tries to
keep the economy vertical via printing money, the inflation monster is
alive and well - and is growing and gaining momentum,” he
writes.
Bill Barnhart Column - Chicago Tribune
(January 31st, 2008)
The Fed cut rates because it can. This is another persuasive point, described in
detail in a report Wednesday by technical market analyst John Kosar of Asbury
Research. Kosar observed that recent surveys of the public's concern
about inflation are growing ominous. Likewise, market-based indicators of
inflation expectations seem poised to jump higher. But at the moment, survey and
market indicators of inflation fears are relatively benign, allowing Federal
Reserve Board Chairman Ben Bernanke to assert that inflation expectations are
"well anchored."
International Herald Tribune (January
30th, 2008)
"The Fed understands that it needs to make hay while the sun shines by pumping
as much liquidity into the economy now, while it still can, before the public's
inflation expectations catch up with reality," said John Kosar, president of
Asbury Research in Chicago.
Reuters (January 8th, 2008)
"Looking at the big picture, I think there's more downside to go. I think we're
in for a bigger decline," said John Kosar, market technician at Asbury
Research in Chicago. "The market is pretty afraid of economic weakness
here."
John Kosar was interviewed by Kate Wellingfor
the March 2006 issue of Welling@Weeden. Welling@Weeden is an insightful and irreverent journal of
investment news and analysis that is widely read by professional money
managers worldwide. It is written by former Barron's
associate editor Kate. Welling for
Weeden and Company's client
base of more than 1,500 institutional investors.
Kate is renowned for her in-depth interviews
of some of the biggest names in the financial industry, including
George Soros, Walter Mintz, Robert Wilson,
Mario Gabelli, Lee Cooperman, Julian Robertson, Bill Gross, Ron Baron,
Ralph Wanger, Peter Lynch, Art Samberg, and Jim Rogers.
We thank Kate for her interest in our work. VIEW THE PDF
On The Air
2007
June 4th, 2007
John Kosar
appeared on Bloomberg Television's Morning Call at 7:00 AM ET with host
Carol Massar. John and Carol discussed the a 35-year secular trend of
declining long term US interest rates.
April 9th, 2007
John Kosar
appeared on Bloomberg Television's Trend Watch at 6:35 AM ET with host Brian Sullivan.
John and Brian discussed the direction of US
interest rates.
March 19th, 2007
John Kosar
appeared on Bloomberg Television's Morning Call at 6:35 AM ET with host
Matt Nesto. John and Matt discussed the VIX and its implications for
direction of the US stock markets.
February 8th 2007
John Kosar hosted Bloomberg's "Thursday
Night Technicals" series from 3:30 to 5:30 PM CT at Bloomberg's Chicago training facility at 111
S. Wacker Drive, which is two blocks from the Chicago Mercantile Exchange in
Chicago's "Loop". John displayed and discussed a series of charts
that detailed Asbury Research's outlook for the US financial markets in
2007.
January 22nd 2007
John Kosar
appeared on Bloomberg Television's Trend Watch at 6:35 AM ET with host Brian Sullivan. The topic covered was the direction of US
interest rates in 2007.
October 23rd, 2006
John Kosar
and Lehman Brothers' Jeff DeGraff appeared on CNBC's Morning Call
with host Mark Haines to discuss the US stock market.
