If Market Headed Higher Through The Election, Rally Should Begin Here
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Asbury Research and Asbury Investment Management (AIM) both heavily rely on Asbury Research’s Tactical models, the Correction Protection Model (CPM) and Asbury 6 (A6), to indicate when investors should be adding risk to portfolios and when they should be protecting capital.
Since the US stock market has an inherent long-term upward bias, the ability to avoid market declines is an extremely effective way to improve performance — without taking on any additional risk. The ability to do this is especially important for older investors, who don’t have the same amount of time to recoup a big drawdown that a 30-year-old does.
A recent example of how this risk avoidance approach works in real-time occurred earlier this year when our Correction Protection Model went to Risk Off on February 24th and then back to Risk On on April 6th, as shown in Chart 1 below. This resulted in avoiding a big chunk of that decline, and the opportunity to reinvest those assets 457 index points or 14% lower, after which the market subsequently rose by 806 points or 29%.
Editor’s Note: The Correction Protection Model (CPM) is our proprietary defensive model for the S&P 500. CPM’s primary objective is to protect investor assets during stock market corrections but to otherwise remain invested, taking advantage of equity prices’ historical propensity to move higher over time. CPM is objective, data driven, and independent of the day to day price fluctuations in the major US stock indexes. CPM is binary: it is either Risk On or Risk Off. This wealth preservation tool was initially developed following the 2008 Financial Crisis, to protect investors from another similar market collapse.
This week, as Ken Tomko of Asbury Investment Management (AIM) pointed out in this week’s video (below), our focus is on the benchmark S&P 500’s (SPX) upcoming reaction to 3408 support. Chart 2 below shows that SPX tested and held this level late last week.
As long as this support area continues to hold, and our Correction Protection Model retains its October 5th Risk On status, we will be anticipating an upcoming retest of the 3588 September 2nd all-time high.
Our latest video below shows how we have navigated these recent market conditions in real-time.
Asbury Investment Management (AIM): Our Latest Video
Asbury Research Ideas, Expertly Managed
Here is our October 23rd Video Review, which explains how we have recently utilized Asbury Research’s market analysis and investment ideas to professionally manage client portfolios.
AIM offers a unique approach to investment management that is data driven, dynamic, and solely based on the currenttechnical condition and quantitative risk/reward profile of the financial markets.
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This communication is for informational purposes only. It is not intended as investment advice, or as an offer or solicitation for the purchase or sale of any financial asset. No inferences may be made and no guarantees of profitability are being stated by Asbury Research LLC. The risk of loss trading in financial assets can be substantial. Therefore, you should carefully consider whether such trading is suitable for you in light of your financial condition.