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Market Bottom, Or More Weakness Ahead?
In our previous January 17th Stock Market Update & Asbury Investment Management Video entitled Hanging On For Dear Life, we pointed out that our Asbury 6 risk management model had been on a Positive status since December 22nd but, at 3 positive (green) and 3 negative (red) constituent metrics, was on the verge of tuning Negative.
The model did indeed turn Negative as of the close the next day, January 18th, and was immediately followed by a nasty 9%, 410 point decline in the benchmark S&P 500 (SPX) into the 4223 January 24th low. Also in that report, we had identified the 4279 to 4238 area as formidable underlying support, and the index has since rebounded from it by 210 points or 5% into Friday’s 4432 close.
Chart 1, an updated version of the chart from that January 17th update, shows that last week’s rebound from support has resulted in a test of the S&P 500’s 200-day moving average, a widely-watched major trend proxy currently situated at 4430. We view this as major overhead resistance.
This sets up a Strategic decision point for the index, from which its recent decline — which appears to be an emerging major downtrend — should resume IF it’s still valid and intact.
Meanwhile, Table 1 below shows that, through Friday, the Asbury 6 is still Negative with all 6 constituent metrics in the red.
The Negative reading in the “A6” underscores our contention that last week’s sharp rally is — at least thus far — just a rebound within an emerging major downtrend in the S&P 500. It would take a shift back to Positive in the A6, amid a sustained rise above the 4430 area, to indicate that last week’s lows are a sustainable bottom and a new, significant market advance is beginning.
Editor’s Note: The Asbury 6 is our own quantitative risk management tool which 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. 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.
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 January 28th 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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