This Week’s Market Bounce: New Buying Opportunity Or Place To Further Reduce Risk?
The title of our previous May 22nd update was It’s Sink Or Swim Time For US Stocks. In that report, we said:
“..without improving market internals, as would be seen in a positive shift in our Asbury 6, it is likely to be the latter (sinking stock prices).”
And sink they did, by another 127 points or 4.5% by the benchmark S&P 500 (SPX) into the 2729 June 3rd low.
Chart 1 below shows that this week’s rebound was actually triggered by a test of important underlying support at 2722, which is the March 8th benchmark low.
This is a logical place for the market to begin a rebound, as traders cover short positions and value hunters look to “buy the dip”.
However, at least so far, this logical place for a rebound has not yet shown any indications that it’s any more than that. Table 1 below shows that our Asbury 6 key market internals, which measure the market’s strength “under the hood” in six different ways, is still negative (bearish) as it has been since May 7th — which was just three trading days off the May 1st all-time high.
Our Asbury 6 can change quickly, however, so we will be closely monitoring them this week for any indications that this technical bounce from support has evolved into a new buying opportunity.
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