How Sustainable Is This Rally?
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In our previous March 24th Stock Market Update, entitled Searching For A Bottom, we pointed out that the late February stock market collapse had positioned the S&P 500 (SPX) right on top of formidable underlying support at 2193, which represents the August 2016 high.
Chart 1 below, an updated version of the one from that report, shows that 2193 held like a rock (green highlights) and SPX quickly rebounded back up through its 2009 secular trend line at 2489 (blue) and — as of today — is now testing initial overhead resistance at 2722 to 2729 (red) which represents the March and June 2019 lows.
This test of overhead resistance sets up another near term decision point for the US broad market.
Chart 1 identifies the key inflection points in the benchmark S&P 500, both above and below the market. We use it as a dynamic game board, to help determine where to potentially move capital in and out of the market. Asbury Research’s tactical models, Correction Protection Model (CPM) and Asbury 6, help us determine what to do at those levels, and when.
Table 1 below shows that, through the close on Monday (April 6th), three of the Asbury 6 key market internals have moved back to a Positive reading. Four or more metrics in one direction, either Positive (green) or Negative (red), are necessary to indicate a tactical bias. The model is currently on a Negative status as of February 24th.
The Asbury 6’s currently equally balanced status, while SPX is testing overhead resistance at SPX 2822 to 2856, indicates that this is a near term decision point for the market — and a preliminary test of the health and sustainability of the rally from underlying support at 2193. How our tactical models react over the next several days will give us a good idea of what the market’s next move will be — either higher or lower.
Our latest video below shows how we have navigated these recent market conditions in real time.
Asbury Investment Management (AIM): Our Latest Video
Asbury Research Ideas, Expertly Managed
Here is our April 7th 2020 Video Review, which explains how we have recently utilized Asbury Research’s market analysis and investment ideas to professionally manage client portfolios.
AIM offers a unique approach to investment management that is data driven, dynamic, and solely based on the currenttechnical condition and quantitative risk/reward profile of the financial markets.
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