US Stock Market: On The Brink Of A Deeper Decline

In early October we alerted Asbury Research subscribers of weakening market internals, and started protecting Asbury Investment Management (AIM) portfolios against a bearish reversal in what appeared to be a weakening US stock market.

Less than a month later, the benchmark S&P 500 (SPX) had collapsed by 11% to 2604 by October 29th as shown in the chart below.  The index subsequently ripped higher into the 2815 November 7th high and, as shown by the blue highlights, has been trading within those two extremes ever since.

S&P 500: July 2018 through the present

There are 2 important takeaways here:

  1. The sideways trade of the past two months, as highlighted in blue, indicates investor indecision and, as such, is the probable starting point of the US broad market’s next directional move, and
  2. SPX has mostly been trading below its 200-day moving average, a widely-watched major trend proxy, which means the major trend is down (bearish).

Corroborating Takeaway #2 is the fact that 57 of the 60 global stock markets we track are also trading below their 200-day moving averages.

The red highlights on the chart show that, inside the past two months of of sideways trade, a smaller, triangular pattern exists, and that SPX is starting to trade below its lower boundary at 2655.  This suggests the market is currently leaning downward, toward even lower prices, which would be confirmed by a sustained decline below 2604.

A move below 2604 would indicate that the current major downtrend in SPX, which was initiated by the sharp October decline, is resuming.  Should this occur, we will be watching key chart levels below the market, along with our key internal market metrics, for opportunities to reestablish long positions at much lower, and better, levels.

The video below shows how we have navigated these choppy conditions for Asbury Research Management clients over the past several weeks.

Asbury Investment Management (AIM): Our Latest Video

Thank you for your interest in Asbury Investment Management. We attempt to provide the highest level risk management and investment performance available.  Anyone can provide you exposure to the markets. We bring our undivided attention, skill and experience to investing AND protecting our clients capital. We hope you will find these bi-weekly commentary and video reviews informative and helpful. Please don’t ever hesitate to ask if you would like to have a more in-depth conversation about our processes.

Click Here for our 12/13/2018 Video Review, which explains how we have used Asbury Research’s market analysis and investment ideas to professionally manage client portfolios.

For further information about Asbury Research Management, please email or call 1-844-4-ASBURY (1-844-427-2879).


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