The Market Is At A Tactical Inflection Point
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In our previous August 29th Stock Market Update & Asbury Investment Management Video, entitled Don’t Be Caught Without A Chair When The Music Stops, we pointed out that on August 19th the benchmark S&P 500 made its 8th successful test of its 50-day moving average (a widely-watched minor trend proxy) since January 29th. This is not normal market behavior. We warned that one day soon this year’s Pavlovian “buy the dip” strategy” would stop working, and when that happened it could leave a lot of frightened investors in its wake. Frightened investors trigger and fuel market corrections.
The benchmark S&P 500 (SPX) peaked four days later, on September 2nd, and has since declined by 2% from those highs. Meanwhile, our Asbury 6 Tactical model is starting to show some signs of internal weakness.
Editor’s Note: The Asbury 6 is our own quantitative risk management tool that is updated daily in our Research Center. The “A6” is a combination of six diverse market metrics that we grouped together to look beyond the day-to-day, up-and-down noise of the stock market to determine its actual health — in much the same way that a doctor first checks the patient’s vital signs during an office visit.
We view the “A6” as a lie detector test for the market. It helps us to identify real, sustainable market advances or declines from computer-driven traps for investors.
Four or more metrics in one direction, either Positive (green) or Negative (red), indicate a Tactical market bias. The dates in each cell indicate when each individual constituent of the A6 turned either positive (green) or negative (red). When all Asbury 6 are positive, market internals are the most conducive to adding risk to portfolios. Each negative reading adds an additional element of risk to participating in current or new investment ideas.
The table below shows that, through Friday September 10th, three of the Asbury 6 constituent metrics are positive (green). The “A6” model itself has been on a Positive status since July 20th. The S&P 500 has risen by as much as 5.2% since then.
When the Asbury 6 is equally balanced as it is now, it indicates the internal condition of the stock market is starting to weaken — but not yet by enough to indicate a change in market direction. It suggests that, if the current Tactical uptrend in the US stock market is still valid and intact, it should quickly resume from its current level. Should the “A6” continue to weaken, however, it would warn that the stock market is beginning a long-overdue corrective decline. And, once this weakness is corroborated by a decline below what we call “Tactical support” in the benchmark S&P 500, it will confirm a corrective decline is underway in the US broad market.
Our latest video below shows how we have navigated these recent market conditions for client portfolios in real-time.
Asbury Investment Management (AIM): Our Latest Video
Asbury Research Ideas, Expertly Managed
Here is our September 10th Video Review, which explains how we have recently utilized Asbury Research’s market analysis and investment ideas to professionally manage client portfolios.
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This communication is for informational purposes only. It is not intended as investment advice, or as an offer or solicitation for the purchase or sale of any financial asset. No inferences may be made and no guarantees of profitability are being stated by Asbury Research LLC. The risk of loss trading in financial assets can be substantial. Therefore, you should carefully consider whether such trading is suitable for you in light of your financial condition.