US Stock Market: Survives A Test Of Underlying Support Amid Improving Internals

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In our December 4th Stock Market Update & Asbury Investment Management Video, we pointed out that 2 of our Asbury 6 key market metrics had turned Negative (bearish) while the benchmark S&P 500 (SPX) was testing minor underlying support at 3077.

Editor’s Note: The Asbury 6 is a tactical model that consists of six key market indicators, of which only one – by design — is based on price.  We use the “A6” as a lie detector test for the market that helps us identify real, sustainable market advances or declines from computer-driven market noise that often become traps for real investors.

When the Asbury 6 starts to weaken as it did in early December, we use it as a means to identify a tactical inflection point.  We then watch closely for either:

  • the A6 to continue weakening (4 or more Negative constituents indicate a bearish tactical signal) as SPX breaks down below underlying support to indicate a correction is beginning, or
  • for the A6 to quickly recover as underlying support holds, indicating the bullish trend is resuming.

In this case it was the latter, as Chart 1 below shows that SPX 3077 was tested and held on December 3rd.

Chart 1

Meanwhile, Table 1 below — updated through yesterday’s close — shows that that the high yield corporate bond spread and market breadth components of the Asbury 6 quickly turned back to a positive status on Dec 4th and 5th, respectively, as the US broad market index resumed the uptrend.

Table 1

This combination of in-house tactical models and their relationship with key areas on a price chart is one way that we keep our subscribers and clients out of trouble, and with the trend.

Best Wishes for a safe and happy Holiday Season!

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