March 28, 2025 – Jim Puplava and John Kosar, Chief Market Strategist at Asbury Research, dissect the stock market’s recent struggles and the potential for a major bearish trend. They analyze key technical indicators, such as the S&P 500’s 200-day moving average and market sentiment extremes, to gauge whether a rally or further downside is on the horizon. With insights into sector rotations, global market outperformance, and the rally in precious metals, Kosar also highlights the impact of political uncertainty and economic data. For investors seeking actionable insights during turbulent times, this discussion is a must-listen.
Email: john[at]asburyresearch[dot]com
Website: https://asburyresearch.com/
YouTube: https://www.youtube.com/%40asburyresearch
To speak with any of our advisors or wealth managers, feel free to Contact Us online or give us a call at (888) 486-3939.
Stay ahead of the news! Subscribe to our premium weekday podcast
Discussed in today's show:
- The S&P 500 has broken below its 200-day moving average, signaling a potential major bearish trend.
- The NASDAQ 100 is exhibiting a double top pattern, with significant breakdowns in key technical levels.
- Market sentiment is at extreme lows, similar to levels seen near historical bottoms.
- Breadth metrics indicate the market is oversold, suggesting the potential for a short-term rally.
- April’s seasonality is historically strong, providing hope for a near-term market rebound.
- Precious metals, like gold and silver, have seen strong performance, driven by uncertainty and inflation fears.
- Global equities, particularly in Europe and South America, are outperforming the U.S. market.
- Political uncertainty and inconsistent messaging from Washington are adding volatility to markets.
- Oil and copper prices show strength, but their traditional correlations with the economy are breaking down.
- Investors are advised to remain cautious and wait for the S&P 500 to reclaim 5,800 for confirmation of bullish momentum.
Transcript
Jim Puplava:
Well, if you're in the markets this week, it hasn't been one of the better weeks. Stocks have been falling here since late February. Will this continue? Are we heading into a bear market, or is a rally around the corner? Let's find out. Joining us on the program is John Kosar. He's chief market strategist and portfolio manager at Asbury Research. John, you sent me a couple charts, and you know, I'd like to make these available for listeners so they can look at them. But you have a chart of the S&P with the 200-day and the 50-day. What's this chart telling you, and what does it mean?
John Kosar:
The chart is telling us that the S&P 500 is, according to just real simple technical tools, looking like it's in the early stages of a major bearish trend change. We're looking at the 200-day moving average, which a lot of investors look at as kind of the back-of-the-envelope indicator of where the major trend is. And we're dropping down underneath the highs that we made last year in the middle of the summer—July 16, to be exact, at 5,670. So what's going on here with major indexes? You're seeing this in the NASDAQ, you're seeing this in the Russell 2000. We're breaking 200-day moving averages. We did that earlier in the month. The first couple of weeks of March, we rallied back to retest the 200-day moving average from underneath, which, to most people that follow charts, is a retest of the breakdown. And again, we had some pretty—we had a bad sentiment number out today that really lit the candle on this thing. And I think a lot of people are, Jim, maybe selling on the failure to get back up through the 200-day moving average a couple days ago.
Jim Puplava:
Now you have another chart of the NDX, which is the NASDAQ 100. I mean, the NASDAQ looked like it’s fallen off a cliff.
John Kosar:
It has. And, you know, so if you're a technician and you're looking at this, you're going to see a double top from the December 16 and the February 19 highs. By the way, I will make this available to anybody at the end of the show or whatever. If they contact us, we'll make this available for them so you can see what we're talking about here. But the NDX, which is where all the big-cap names are, where all the Mag 7 names are, broke the first week of March, crashed through the 200-day moving average. And we broke through a trend line that you could draw from the low that we made in January of 2023—a two-year-and-change trend line. And we rallied back up there to retest that two or three days ago. And then, you know, I think the sentiment number is really the one that spooked the market. And so right now it looks like we broke through major support. We quickly came back up to retest it this week, and right now we're failing, Jim.
Jim Puplava:
So you have some indicators that you follow that suggest we could be in for, let's say, a short-term rally. Whether this is a short-term rally and we go back into a bear market trend, we don't know at this point. But let's talk about some of the things that you're seeing that are positive, that we could be close to a bottom.
John Kosar:
Yeah, there are some longer-term metrics that we look at. We look at a breadth metric that measures the percentage of NYSE composite stocks trading above the 40-day moving average. When that number gets low, down under 33%, even in bear markets, you usually get some kind of a rally because the market is kind of overextended. It's a little too negative—let's just say that as a way to explain it easily. If you look at Investors Intelligence data—our firm is actually one of the inputs for the Investors Intelligence data—so I'm looking at one of their iterations of that data. It’s bulls minus bears, for those that follow Investors Intelligence. It’s been around for decades. It’s showing that what they call newsletter writers—I don’t know if anybody actually writes a newsletter anymore—but they’re firms like ours that are independent firms publishing investment research. This demographic is at a least bullish extreme right now that, looking back 15 years, has been within weeks of some kind of a bottom. So that’s interesting to us. It’s not a timing tool. It doesn’t mean, you know, you go in and just blindly buy the market. But it does suggest the market’s getting off-sides in terms of its negativity. The other thing we’re looking at is seasonality data. I’ve got seasonality data, also on that same report that I sent you, that dates back to 1957. We use ’57 because that’s when the S&P 500 began, evolved from something called the S&P Composite Index that was around for almost 100 years. But it shows that April is the second seasonally strongest month of the year based on these data. So, you know, there are some rays of hope there. I mean, I hate to use “hope” when it comes to markets, right, because we’re really numbers-driven, and hope isn’t part of our equation. But there are a few metrics that we track that suggest that somewhere in here, the market’s feeling around for a bottom. What can override that? More bad news. We’ve got jobs coming out next week. I think jobs is going to be a huge—you know, there’s jobs data from Wednesday through Friday of next week. Considering all of, you know, the recent data, I think jobs may be one of the most important numbers to watch here. So I would say between now and the end of next week, this will probably be resolved. But let me say, if the market can’t feel around and find a bottom from here, that’s bad news. That suggests that we are in a bear market that could last one to two quarters. So I mean, this is real—right now, strictly looking at price, the market broke major support, came back to test it again as resistance above the market, and is having an awful day today. One thing I can say with certainty is this little price area that we’ve been trading—5,600, 5,700 in the S&P—is an inflection point, and the next quarterly to multi-quarter move, up or down, is likely to begin here.
Jim Puplava:
John, let’s talk about something that has just had a spectacular run, not only last year in 2024, but also leading this year. And that’s the precious metals market. I think we touched over 3,100 on gold. Silver got up to 35 bucks an ounce. What’s your take on the precious metals here?
John Kosar:
We’ve been involved with gold here. Let me pull up a chart here on my side so I can speak to it. We’ve been in and out of gold here going back to October of ’23. I mean, it’s been a nice, steady move up with some flash periods. But, you know, generally speaking, we’ve been in gold. Our most recent participation in gold was on January 31st. Looking at the chart here, we basically bought a breakout—a technical breakout that we saw on the chart. We actually purchased GLD, which is the SPDR Gold Trust. And let’s see, through today, we’ve got—let’s see—10% lead, and more importantly to me is, since then, we’ve outperformed the S&P by 19%. So as the S&P was struggling, really since December, you know, it’s been trying to make and hold new highs, I was actively looking for other assets to, you know, be involved with, put our customers in—both in asset management and on the research we sell. And gold stuck out to me as a place where, at the least, I could pick up some relative outperformance. You know, we’re making all-time highs here. There’s inflationary talk that I think, you know, could be a factor in this. I see no reason to get out of gold now. I think it still has legs.
Jim Puplava:
I want to talk about another commodity, and let’s talk about oil. Because if you take a look at, for example, the XLE, that broke out—it’s been having a good run here over the last two or three weeks. What’s your take on oil?
John Kosar:
We’ve been in and out of oil. We’ve got a model called the CEPH model—it’s an acronym; it stands for Sector ETF Asset Flows. And we’ve been in and out of XLE for the past month or so. The problem with oil—or as we see it—as we’re looking at the velocity of money moving around the 11 sector SPDRs, what we’ve seen a lot of this year, and I think a lot of it is based on the indecision—there’s a lot of indecision coming out of Washington with tariffs and trade wars and a lot of inconsistent information from week to week. So what you’re seeing is, you’re seeing the money will rush into XLE for a week or two, and then it’ll rush back out and go somewhere else. There’s been a very volatile, under-the-surface churning of assets moving around the 11 sector SPDRs, which, again, I think is a direct result of—you know, the markets can handle bad news just fine. What they can’t handle is indecision. You know, businesses have a tough time trying to make plans a quarter or two in advance when they’re not sure what the rules are going to be. But purely technically, if we can get through 94—94 and a half—in XLE, you know, we could get a move up to 98. But if you look at that chart, we’ve been pretty much dead sideways in XLE with a peak of around 95 bucks a share for the most part and a bottom of around 82, 83 dollars a share. So we would really need to get through—I think we’d have to get through 88, 89 dollars a share to get a tangible breakout. And right now, we’re nowhere near that. We’re getting some outperformance versus SPY, which I like, but the chart’s been sideways since July of 2024.
Jim Puplava:
Well, we own copper and oil too. What’s interesting, John, is you’ve got copper breaking out, you’ve got energy sort of rising. That would tell you, or at least imply, economic strength. You know, they call it Dr. Copper. So there has been talk, with all this uncertainty, that a possible recession may be this year, but right now, copper and oil don’t tell me that.
John Kosar:
Yeah, I’m not sure economically how this all is going to shake out. I’m actually looking here right now—you know, the “Dr. Copper.” Sometimes you get a phrase in the financial markets that, like—people have been talking about the inverse relationship between the dollar and gold for a long time. Statistically, that hasn’t been there for a long time. So I’m looking at a correlation between copper miners, which are the tip of the spear for copper, and the S&P 500. And what I’m seeing here is, typically, looking at correlations five years, two years back—let’s go five years back and ten years back—the linear correlation between copper miners and the S&P 500 is like 0.82, 0.92. For those that are into statistics, we’re looking at a Pearson coefficient. But if you look at three months, six months, and one year, all those correlations have broken down. There’s virtually no correlation between copper and the economy. And a lot of people look at the stock market as being a leading indicator of the economy—or what the market thinks, where the market thinks the economy is going. There’s no real correlation there. So I would not be looking at the strength that we’re seeing in copper now as an indication that, you know, the sun’s going to come out over the next month or two in terms of the S&P 500. I wouldn’t see it that way.
Jim Puplava:
You know, one of the things that we do in managing money, we look at fundamentals, technicals, and politicals. And I can’t think of a year, John, where the politicals are having such an influence on the market—whether it’s the Fed’s going to tighten, whether it’s going to loosen, whether tariffs are on this week, whether they’re off next week. All the political things coming out of Washington, both from the White House and the Fed, are really having an influence on the markets.
John Kosar:
They are. Again, I had mentioned this earlier—I’ve been doing this for a long time, like you have. If the markets understand what’s going on, their discounting mechanism is really what the stock market is. If the stock market knows—has an idea of what the bad news is and what the implications of the bad news are—they can discount that, and they can look forward into the future, look forward a quarter or two, and go from there. They don’t know right now. It’s very erratic. You know, we’ve kind of rearranged the globe in terms of trading partners and, you know, political allies that have been in place, you know, since World War II—everything is up in the air. There’s inconsistent messaging coming out of the White House, and I think that puts the Fed on its back foot because now, how is the Fed supposed to handicap where they need to take short-term rates if they don’t know what’s going on from day to day? So yeah, I don’t know that that changes anytime soon. But I think that’s the biggest problem that the stock market has right now—it doesn’t know what’s happening next week.
Jim Puplava:
And it changes every single week, which makes it much, much tougher on the market. You know, you don’t put the tariffs on, the market rallies; you put the tariffs on, the market goes down. And that can change every week. When you’re looking at this, and I know you follow fund flows, is there anything that stands out where money is going into? You know, one of the things we talked about, like in energy—you can see money flow in there for a couple of weeks, the energy market’s rallying, then all of a sudden it comes out, goes someplace else.
John Kosar:
The only consistent place that I’ve seen asset flows going into since the beginning of the year is the metals—gold, silver, silver miners. The other place that we’ve had some success—early this year, in the middle of January, we started to—we have another model called “US versus the World.” And it looks at the US market, the S&P 500 specifically, versus 25 foreign equity markets. It’s a good cross-section of the whole globe. What we noticed in the middle of January was that we were starting to see some strength bubbling up in Western Europe. It started in Germany, moved over to Italy. I think Spain was in there for a while. And then you saw it move to South America—Peru, Brazil for a time, Peru, Chile as well. And now it’s kind of all over the world as of the end of last week. And we’re going to take another fresh look at this model over the weekend—22 of those 25 global equity markets were outperforming the S&P on both a monthly and a quarterly basis. And the AUMs have showed that there’s been a lot of money—like, if you look at something like SPDW, which is the SPDR S&P World ex-US ETF, it has outperformed the S&P since January 27th by 13%. So there’s money leaving our markets, apparently, and going overseas. And again, first it started in Western Europe, and now it’s basically spread to the globe. So those two places have been kind of ports in the storm that we were able to catch and pick up some outright and relative performance on those.
Jim Puplava:
Yeah, I’m just looking at a chart of the German-French market and the Euronext 100, and it’s really been on a tear since December. John, as we close, what would you be doing here as an investor? Your indicators are telling you that we may be close to a bottom. We may rally here in the next couple weeks—of course, that could change next week with the unemployment numbers. But what are you seeing here that really stands out, and what would you be doing now?
John Kosar:
One thing that’s kind of a precursor to your question—we had sentiment numbers today that I just pulled up. Consumer sentiment—I’m reading the headline right off of MarketWatch: “Consumer sentiment falls to lowest level in over two years as worries about the labor market grow.” That level that they talked about—lowest level since November of 2022. If you look at October of 2022, that was a giant bottom in the stock market, right? The way these sentiment numbers work—or any sentiment numbers work—is when the sentiment’s the worst, that’s often within a month or two of some kind of a meaningful bottom. So the fact that we’re testing that level—that is not by any means a signal to go out and buy the market today and be assured that you bought the bottom. But when sentiment is this bad, oftentimes we’re within—we’re in the neighborhood, within a month or so, of some kind of a bottom. Now, what do you do about that? To me, if I’m an investor now, we have tactical models here in-house that are much more agile, and they move more. But I think for an investor out there—if you’re not tactically oriented like we are—we really need to get back up above 5,800 in the S&P 500 to tell me that some of these seasonality and sentiment and market breadth extremes that I had mentioned earlier in the interview, that they’re actually having a tangible effect on price. I think for your average investor, to just cross your fingers and buy the market now is a risky proposition for those that are not tactically oriented. Above 5,800 is where we really need to be in the S&P 500 to suggest that these kinds of environmental factors that I’m talking about are having a positive effect on price.
Jim Puplava:
All right. So hopefully we may get a bounce here—or at least a bear market rally, as you started out earlier in the show. We don’t know yet if this is a bear market. Time will tell us that. John, as we close, if our listeners would like to follow your work, give out your website, if you would.
John Kosar:
Sure. Asburyresearch.com, and there’s a contact tab on that landing page up in the right corner. If you fill that out—just name, address, email address, of course, and phone number—there’s a little query box down at the bottom. Put “two-week free trial per Financial Sense,” and we will set you up on a two-week free trial. You can see what we do in real time.
Jim Puplava:
All right. Well, listen, John, it’s always great to talk with you, and we’ll talk to you once again.
John Kosar:
Yeah, have a great second quarter. We’ll see what happens. It’s going to be interesting.
If you’re not already a subscriber to our weekday FS Insider podcast, click here to subscribe. For a link to our full podcast archive, see Financial Sense Newshour (All) and don't forget to subscribe on Apple Podcasts, Spotify, or YouTube Podcasts!
To learn more about Financial Sense® Wealth Management, give us a call at (888) 486-3939 or click here to contact us.
Content is for informational purposes only and does not constitute financial, investment, legal, or other advice.
There are risks involved in investing, including the potential for loss of principal.
Forward-looking statements are based on assumptions that may not materialize and are subject to risks and uncertainties.
Any mention of specific securities or investment strategies is not an endorsement or recommendation.
Advisory services offered through Financial Sense® Advisors, Inc., a registered investment adviser. Securities offered through Financial Sense® Securities, Inc., Member FINRA/SIPC. DBA Financial Sense® Wealth Management. Investing involves risk, including the loss of principle. Past performance is not indicative of future results.
