John Kosar's  Instablog

The following is one of the 18 slides that comprised our US Financial Market Chart Book for September 2012, which was distributed to clients on August 22nd. It includes an accompanying video in which John Kosar, our Director of Research, walks you through and explains each chart and investment idea in the report.

excerpt from US Financial Market Chart Book
September, 2012
US Market Sectors

The pie charts on the slide below are our own metric that we created years ago as a means to track and measure the flow of investor assets in and out of the various sectors of the S&P 500, which we have found to be a leading indication of US broad market direction 1-2 quarters in advance.

(click to enlarge)

The charts display the percentage of sector bet-related investor assets, as represented by the Rydex Sector Funds, that are invested in each sector of the S&P 500, as represented by the iShares Select Sector SPDR ETFs. The chart on the left displays the distribution of these assets through August 17th. The chart on the right shows the historic daily average distribution of these assets since late 1998, which is when the Ishares ETFs began trading.

The slide shows that, through August 17th, the Technology and Industrials Sectors were the most severely under-invested while the defensive Consumer Staples and Utilities Sectors were the most over-invested.

This metric provides us with: 1) a means to accurately monitor the migration of investor assets from one sector to another over time, and 2) a metric that precisely defines historic over- and under-invested extremes for each individual sector, which often coincide with extremes in relative sector outperformance or underperformance versus the bellwether S&P 500.

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US Financial Market Chart Book, one of 8 different reports that Asbury Research produces for clients/subscribers throughout the month, is a monthly collection of key charts and data series that collectively convey our best investment ideas for the next one to several months in the US stock market and market sectors, US interest rates, the US Dollar, and economically influential commodities like crude oil and copper.

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