Conclusion, Investment Implications, Strategy
Table 1 below shows that as of the close on January 12th, 4 of the Asbury 6 constituent metrics have shifted to negative (red). This changes the “A6” Model itself to a Negative status, from Positive on November 2nd, as four or more metrics in one direction indicate a directional bias.
Table 1
Chart 1 below highlights the Asbury 6’s directional signals over the past 14 months
Chart 1
Asbury 6 FAQ
Q: What is The Asbury 6?
A: The Asbury 6 is a combination of six diverse market metrics that we have combined as a tool to look beyond the day-to-day, up-and-down noise of the stock market to determine its actual health — in much the same way as a doctor first checks the patient’s vital signs during an office visit. We view the A6 as a lie detector test for the market. It helps us to identify real, sustainable market advances or declines from computer-driven traps for investors — the latter which we believe are often generated by algorithmic (computer) trading which now comprises about 80% of daily trading volume.
Q: How should I interpret and use the Asbury 6?
A: The “A6” is updated daily in our Research Center and includes data through the previous day’s market close. Four or more metrics in one direction, either Positive (green) or Negative (red), indicate a tactical bias. The dates in each cell indicate when each individual constituent of the A6 turned either positive (green) or negative (red). When all Asbury 6 are positive, market internals are the most conducive to adding risk to portfolios. Each negative reading adds an additional element of risk to participating in current or new investment ideas.
When the market is at a Tactical inflection point, we will often see the Asbury 6 constituents move quickly and erratically back and forth between Positive (green), Negative (red), and sometimes equally balanced (3 positive/3 negative) readings. We call this phenomenon “blinking”. Blinking indicates temporary investor indecision, and the market level where the blinking occurs typically becomes the starting point of the market’s next sustained directional move.
Q: Why use quantitative models?
A: Because they provide us with the tools to be disciplined and consistent in our investment approach, rather than chasing the market’s latest twitch. Another key reason is to help keep drawdowns (losing periods in our portfolios) small and relatively short-lived. There is no perfect model that will catch every trend because no one can see the future. But we are convinced that a disciplined, data-driven market approach can provide investors with a repeatable methodology to participate in the stock market and capture most of its gains, over time, with significantly less risk.
Video: About The Asbury 6
Disclosure/Disclaimer: The information in this website is provided solely for informational purposes and is not intended to be an offer to sell securities or a solicitation of an offer to buy securities. The strategies employed in managing this and other model portfolios may involve algorithmic techniques such as trend analysis, relative strength, moving averages, various momentum, and related strategies. There is no assurance that these strategies and techniques will yield positive outcomes or prevent losses. Past performance as indicated from historical back-testing is hypothetical in nature and does not involve actual client portfolios, does not consider cash flows, market events and is not predictive of future performance. The model is managed by contemporaneously recording hypothetical trades. Such trades are not live trades and are not influenced by emotional or subjective reactions to extraneous market, economic, political and related factors. The performance for such model(s) is derived from utilizing a variety of technical trading strategies and techniques. Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models utilize mathematical algorithms to attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, new data is accurately incorporated, or the software can accurately predict future market, industry and sector performance. Asbury Research LLC does not and cannot provide any assurance that an investment in the model portfolios will yield profitable outcomes. The risk of loss trading in financial assets can be substantial, and different types of investment vehicles, including ETFs, involve varying degrees of risk. Therefore, you should carefully consider whether such trading is suitable for you, in light of your financial condition. An investor’s personal goals, risk tolerance, income needs, portfolio size, asset allocation and securities preferences, income tax and estate planning strategy should be reviewed and taken into consideration before committing to a specific investment program. Please consult with your financial advisor to discuss the appropriateness of any strategy prior to investing. All investments involve risk. Principal is subject to loss and actual returns may be negative. Returns are not guaranteed in any way and may vary widely from year to year.