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John Kosar
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John Kosar, CMT, is Director of Research of Asbury Research LLC ( 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
  • Technology Sector: How Current Asset Flows May Affect Q3-Q4 Performance 0 comments
    Jul 29, 2013 11:26 AM | about stocks: XLK

    Excerpt From: Asbury Research Commentary
    Asset Class: Technology
    Topic: Current vs. Historic Asset Flows
    Date: July 18th, 2013

    Chart 2 below measures the flow of investor assets in and out of the various sectors of the S&P 500 via our own metric, a pie chart that displays the percentage of sector bet-related 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 purple highlights on the chart point out that Technology currently comprises just 4% of our "sector pie" - which is just a fraction of its historical daily average of 15% since 1998.

    (click to enlarge)

    Asbury Research's Asset Flow Metric: US Market Sectors

    This metric indicates that, despite recent relative sector outperformance, Technology is still historically very under-invested versus the other sectors of the US broad market index and thus amid favorable conditions for upcoming outright strength and relative sector outperformance.

    The blue line in Chart 3 below plots the daily relative performance of the NASDAQ 100 versus the S&P 500 since 2005. The green highlights point out that the last time that Technology comprised just 4% of our sector "pie" as shown in Chart 2 was at the end of Q3 2008, which the light green highlights show marked the beginning of an extended period of relative strength that saw NDX outperform SPX by 45% into April 2012.

    (click to enlarge)

    Relative Performance of NASDAQ 100 vs. S&P 500: 2005-2013

    We are not suggesting these data ensure that another similarly huge, multi-year period of relative outperformance by Technology is emerging now, but rather that historic extremes in our asset flow-based metric as shown in Chart 2 often define special investment opportunities.


    Our asset flow-based pie chart, as shown above, has proven to be very adept at identifying upcoming 1-2 quarter trends of relative sector outperformance or underperformance, but it is not intended to be a timing tool because it is typically a leading rather than coincident indicator. In other words, it is usually "early". Our trend model utilizes a more near term oriented, price and momentum-based component to signal precisely when this upcoming move is getting underway. More about our trend model, plus recent performance data, is available by clicking here.

    Stocks: XLK
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