Conclusion, Investment Implications, Strategy
The benchmark S&P 500 (SPX) is at an important minor (tactical) decision point, from which it must either quickly resume its 2019 advance or begin an overdue corrective decline.
Table 1 below displays the newly updated status of our Asbury 6, showing that 3 of them have now shifted to Negative as of yesterday with only the relative performance of stock prices versus high yield bond prices, the monthly rate of change (MROC) in the S&P 500 (SPX), and On Balance Volume (OBV) in SPX still in Positive territory — and all three of these metrics appear to be just anther 1-2 weak sessions away from also turning Negative.
Table 1
We interpret this “balance point” in the Asbury 6 as a strong indication that this is an important near term (tactical) decision point for US stock market direction. Our next step is to attach an underlying support level to it, so we can determine if the directional signal we are getting from the A6 is being corroborated by price.
Chart 1 below plots the benchmark S&P 500 (SPX) daily since April 2019. The upper green and blue highlights show that, as first mentioned in last weekend’s The Weekly Wrap-Up, primary underlying support exists 1% below the market at 3205 to 3199. The current minor uptrend will remain valid above it. A sustained move below it would indicate a corrective decline is underway.
Chart 1
If the current minor uptrend is still valid and intact, the S&P 500 should quickly firm up from its current level between now and Friday — while the A6 moves back to a more positive (green) status. Conversely, if four or more of the A6 turn negative (red) this week it will warn that a significant corrective decline is beginning, and would be confirmed by a decline below 3205 to 3199 support.