Don’t Be Caught Without A Chair When The Music Stops
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On August 19th the benchmark S&P 500 made its 8th test of its 50-day moving average — a widely-watched minor trend proxy — since January 29th, and investors again responded like they have all year. By “buying the dip”. One day that “strategy” is going to stop working. And when it does, there will be a lot of frantic investors wondering what happened.
The odd thing about this year’s rally is that market internals — the “under the hood” conditions of the market — have largely not been very good. My colleague Ken Tomko talks about this in our latest video below. Specifically, market breadth has been weak, investor sentiment has been too bullish, and market leadership from the usual places — Semiconductors, Technology, and Small Cap — have been sporadic at best.
Especially during times like this, when the market is rising more out of habit than on actual substance, we pay special attention to our own Tactical models. One of these models is our Asbury 6, shown in Table 1 below. The “A6”, which we update daily in our Research Center, is a combination of six diverse market metrics that were paired together 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.
Asbury Research subscribers can go to our Research Center for our latest model updates and reports by Clicking Here.
Table 1
The Asbury 6 has been on a Positive bias since July 20th. 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.
You can learn more about the Asbury 6 by listening to John Kosar’s August 26th interview by David Keller of StockCharts.com.
Our latest video below shows how we have navigated these recent market conditions for client portfolios in real-time.
Asbury Investment Management (AIM): Our Latest Video
Asbury Research Ideas, Expertly Managed
Here is our August 27th Video Review, which explains how we have recently utilized Asbury Research’s market analysis and investment ideas to professionally manage client portfolios.
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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.