The US Stock Market: At A Long Term Decision Point
In our previous Asbury Research’s Stock Market Update & Asbury Investment Management Video, dated December 27th, entitled The US Stock Market: On The Verge Of A Bear Market, we said that the US stock market, and global stock markets in general, remained in the midst of a major downtrend that we first started warning investors about — and first started protecting investor portfolios from — back in early October.
But something interesting and potentially very important was happening as we were writing that update.
The chart below plots the NYSE Composite Index (NYSE) weekly since 2009 along with its 52-week moving average, the latter a major trend proxy. Although we acknowledge that NYSE may not be the most popular index to invest in, its extremely tight and stable positive correlation to the S&P 500 (SPX) at various intervals over the past 40 years — most recently a essentially lockstep 0.99 over the past 3 months — strongly suggests that as goes NYSE, so is likely to go SPX.
The green highlights show that NYSE tested — and actually declined slightly below — its March 2009 secular uptrend line at the very end of December, but has since aggressively rebounded from it. Meanwhile, similarly important secular support levels were also tested and held, at right about the same time, in a number of other US stock indexes and key sector ETFs — all which are also positively correlated to the S&P 500.
This tells us that, even though the major trend in the S&P 500 — and in about 85% of the 60 global stock indexes we track — is still down (bearish) according to its position below its 200-day moving average, a longer term bottom could be emerging at those late December lows. More detail on this emerging major inflection point for the US stock market is available in our premium research service.
The video below shows in more detail how we have navigated these market conditions for Asbury Research Management clients over the past several weeks.
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Click Here for our 01/22/2019 Video Review, which explains how we have used Asbury Research’s market analysis and investment ideas to professionally manage client portfolios.
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