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An Emerging Tactical Broad Market Bottom
In our previous October 9th Stock Market Update & Asbury Investment Management Video, we pointed out that the benchmark S&P 500 (SPX) was testing major underlying support at 3588 and said we saw this level as a major decision point for US broad market direction. Now, two weeks later, there is some tangible evidence that a Tactical, 1-2 month market bottom is emerging from the recent lows.
One of the key indications of this is that our Asbury 6 risk management model has turned Positive after being Negative for most of this year.
The Asbury 6: Positive As Of October 18th
Table 1 shows that, through Friday October 21st, four of the Asbury 6 constituent metrics have turned green (bullish). This turns the “A6” itself back to a Positive status, indicating the market is now internally healthy enough to facilitate further strength.
How To Interpret The Asbury 6: Four or more metrics in one direction indicate a Tactical bias. The dates in each cell indicate when each individual constituent turned either positive (green) or negative (red). When all Asbury 6 are positive, market internals are the most conducive to adding equities exposure to portfolios.
Emerging Chart Pattern Also Suggests More Strength
Chart 2 plots the S&P 500 daily since July along with its 21- (monthly) and 63-day (quarterly) moving averages.
The gray highlights trace out an emerging chart pattern, a bullish inverse head and shoulders. These patterns typically emerge at stock market bottoms. A sustained rise above S&P 500 3746 would confirm the pattern and target an additional 7.5% rise to 4025.
Two additional things to note: 1) a rise to 4025 would turn the quarterly trend positive, and 2) SPX’s monthly trend appears to be turning positive for the first time since late August.
The Bottom Line
Asbury Research and Asbury Investment Management (AIM) have been very defensive for most of this year. In fact, through the first three quarters of 2022, our Correction Protection Model (CPM) is down just 8.3% year-to-date compared to down 24.8% for the benchmark S&P 500. However, there are now some preliminary but compelling indications that a significant market bottom is emerging from the recent lows.
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Asbury Investment Management (AIM): Our Latest Video
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Here is our October 21st Video Review, which explains how we have recently utilized our data-driven models to professionally manage client portfolios. Our focus is on making sure your nest egg is secure and protected so you can focus on the more important things in life.
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Disclaimer: This is provided for information purposes only and is not intended to be a solicitation to buy or sell securities. The performance indicated from back-testing or historical track record may not be typical of future performance. 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.