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John Kosar
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John Kosar, CMT, is Director of Research of Asbury Research LLC (http://www.asburyresearch.com/). Since 2005 Asbury Research has been providing in-depth, comprehensive financial market research to professional investors that understand the value and importance of incorporating technical,... More
My company:
Asbury Research LLC
My blog:
Logic-Over-Emotion Investing
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  • Health Care Vulnerable To Upcoming Sector Underperformance

    The following is the US Stock Market Sectors section of our Monday, March 24th Keys To This Week report. The report also includes sections that focus on the US Stock Market, US Interest Rates, and The US Dollar.

    This section utilizes our own proprietary indicators that measure sector-specific ETF asset flows to anticipate upcoming relative sector outperformance and underperformance.

    US Stock Market Sectors

    Last week, the sectors with the biggest inflows from a week earlier were Financials (23.44% of all sector-related bets versus 22.82% a week ago) and Financials (10.89% from 10.32% ), per Table 2 below. The sectors with the biggest outflows were Health Care (12.47% versus 12.81% a week ago) and Utilities (6.67% versus 6.93%).

    Table 2

    Chart 7 below shows that, through the end of last week, Health Care comprised 12% of all SPDR ETF-related sector bets compared to 9% historically since 2006. Not shown is that, on an end-of-quarter basis, 12% is the largest percentage of the sector pie that Health Care has comprised in the history of these data. The only other instance of Health Care comprising 12% of all sector bets was at the end of Q1 2013, after which it peaked versus the S&P 500 two weeks later and subsequently underperformed the US broad market index by 4% over the next month

    Chart 7

    Chart 8 below plots the daily relative performance of the Health Sector SPDR ETF (XLV) versus the SPDR S&P 500 ETF (SPY) since July 2013 in the upper panel, with the daily percentage of these sector bets allocated to Health Care plotted by the black line in the lower panel along with its 21-day (monthly) moving average. The red highlights show that this daily percentage contracted below its monthly moving average at the end of last week, indicating a negative change in the trend of asset flows, and that the previous instance of this coincided with relative sector underperformance by Health Care between November 25th and December 17th as the percentage of sector bets that it comprises contracted to 10.6% from 11.5%. This metric suggests that the upcoming relative sector underperformance that Chart 7 warns of has begun.

    Chart 8

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    Mar 24 5:32 PM | Link | Comment!
  • Is The Party Over In Consumer Discretionary?

    The following (green highlights) is one of the 13 charts and the accompanying analysis/commentary that were featured in Monday's (February 11th) Keys To This Week report.

    Today's chart and analysis focuses on our own proprietary metric, which analyzes historic asset flows in US market sector ETFs to determine which sectors are attracting, and losing, investor assets.

    Our work shows that this follow-the-money approach is what ultimately drives relative performance.


    Excerpt From: Keys To This Week
    Asset Class:
    US Stock Market Sectors
    Topic: Investor Asset Flows, Consumer Discretionary Sector
    Date: February 10th 2014

    The long red vertical rectangle on the right edge of Chart 7 below, which is one of our new sector-related metrics, shows that the daily percentage of the "sector pie" that Consumer Discretionary comprises collapsed to just 6.8% through the end of last week, from 9.7% on December 5th.

    (click to enlarge)

    Asbury Research's Market Sector Asset Flow Metric

    This frantic exodus of investor assets out of Consumer Discretionary really accelerated last week, as the percentage of all sector bets that the sector comprises declined from 8.0% on January 31st. As long as the percentage of the pie that Discretionary comprises continues to shrink, recent relative sector underperformance is likely to continue.

    However, another factor to consider is that last week's flush of assets out of the sector suggests a capitulation that could eventually led into a rebound/recovery.

    continued>>>


    Our metric, plotted in the lower panel of the chart above, declined below its 63-day (one business quarter) moving average in mid December, indicating that the percentage of all sector bets within the universe of Sector SPDR ETFs being allocated to Consumer Discretionary was shrinking from a quarterly standpoint. The Consumer Discretionary SPDR ETF (XLY) actually peaked in relative outperformance versus the S&P 500 SPDR ETF (SPY) 2 weeks later, on January 2nd, and has subsequently underperformed the broad market index by 3% through the end of last week.

    Consumer Discretionary outperformed the S&P 500 by 9% during 2013. However, if you were overweight Consumer Discretionary heading into January, you gave back all of the relative outperformance you had accrued since mid August in just 5 weeks.

    More broadly, our asset flow metrics indicate that investors moved out of Consumer Discretionary and Consumer Staples last week, and into Materials and Technology.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 12 4:44 PM | Link | Comment!
  • Technology Sector: Will It Lead Or Bleed Into Year End?

    In our July 29th Research Excerpt, entitled Technology Sector: How Current Asset Flows May Affect Q3-Q4 Performance, we pointed out that our own asset flow-based metric (a pie chart, click the previous link to view it) was indicating that Technology was at an historic under-invested extreme versus the other sector of the S&P 500, one which had previously led periods of both outright strength and relative sector outperformance.

    The green highlights on the chart below show that, as expected, the Technology Sector SPDR ETF (XLK) has outperformed the S&P 500 ETF (SPY) by 4% between July 23rd and August 21st, and is currently hovering just below that August extreme in relative sector outperformance now.

    Meanwhile, XLK has risen by 7% on an outright basis during the same period.

    (click to enlarge)

    Daily Relative Performance Of XLK vs. SPY

    Moreover, our sector asset flow metric (subscribers can login to the Research Center to view the updated version of the pie chart) suggests that there still may be room for more eventual relative sector outperformance by Technology, perhaps over the next 1-2 quarters.

    Near term, however, our next chart warns that the Technology Sector may be getting tired.

    (click to enlarge)

    XLK & Percentage Of Holdings Above 200 MA

    The blue highlights point out that XLK is currently making higher highs on a declining number of constituent stocks that are trading above their 200-day moving average. This negative divergence between price and market breadth is characteristic of a waning trend, and warns of some potential near term weakness for market-leading Technology between now and year end.

    Nov 06 3:17 PM | Link | Comment!
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