John Kosar: These 6 Indicators Provide A “Lie Detector” Test On The Market

TL;DR

John Kosar, Chief Market Strategist for Asbury Research, emphasizes the importance of focusing on data instead of making forecasts in the current market. He discusses the use of internal metrics, sector cash flows, and specific stock ideas to navigate market trends successfully.

Transcript

okay hello everybody and welcome to investing with ibd sponsored by fidelity i'm alyssa cora multimedia content editor and joining me today is my co-host justin nielsen ivy's market research director and our guest today is john kosar he's chief market strategist for asbury research and on today's show we're going to talk about the current market wh... Read More

Key Insights

• 💁 Focusing on data-driven indicators provides more accurate information about market trends compared to making forecasts.
• ☠️ The Asbury 6 model combines multiple indicators to track the health of the market, including the rate of change, relative performance, corporate bond spreads, and investor asset flows.
• 🥺 Sector asset flows can help identify leading sectors and potential stock ideas within those sectors.
• 🥳 Momentum and value models help Kosar identify stocks with favorable risk-reward ratios and strategic trends that offer potential gains.

Questions & Answers

Q: How does John Kosar incorporate data instead of forecasts in analyzing the current market?

Kosar believes that focusing on data-driven indicators, such as internal metrics and sector cash flows, provides more accurate information about market trends than attempting to forecast future outcomes. By analyzing these indicators, investors can adjust their positions based on real-time data and market behavior.

Q: How does John Kosar use the Asbury 6 model to track the health of the market?

The Asbury 6 model combines various indicators, including the rate of change in the S&P 500, relative performance of stocks versus high-yield bonds, corporate bond spreads, investor asset flows, trading volume, and market breadth. By assessing the collective readings of these indicators, the model determines whether the market is healthy or showing signs of weakness.

Q: How does John Kosar utilize sector asset flows to identify leading stocks?

Kosar's Safe Model tracks sector asset flows in ETFs, specifically the 11 sector SPDR ETFs. By monitoring the movement of money between sectors, he identifies trends and potential opportunities. If a sector is receiving substantial asset flows, Kosar explores individual stock ideas within that sector to capitalize on the trend.

Q: What is the rationale behind John Kosar's stock recommendations for LOW, NDAQ, and CDLX?

Lowe's (LOW) and Nasdaq (NDAQ) were selected based on momentum indicators, indicating an uptrend, support levels, and positive internal metrics. Cardlytics (CDLX) was chosen as a value stock idea, with the stock experiencing a correction and positive strategic trends. Kosar focuses on risk-reward ratios and targets areas that offer favorable opportunities based on data-driven analysis.

Summary & Key Takeaways

• John Kosar highlights the significance of analyzing the relationship between different indexes, such as the S&P 500 and NASDAQ, to understand market leadership and lagging indicators.

• He emphasizes the importance of paying attention to data-driven indicators, such as sector asset flows, to identify market trends and leading stocks.

• Kosar shares two momentum stock ideas, Lowe's (LOW) and Nasdaq (NDAQ), and discusses a value stock idea, Cardlytics (CDLX), explaining the rationale behind their selection.