Conclusion, Investment Implications, Strategy
The benchmark S&P 500 (SPX) is less than 3% from a test of major long term support at 2477, which is the current location of the US broad market index’s 2009 secular uptrend line. We view this as a very important long term decision point for the US market from which its next large directional move — up or down — is likely to begin.
Secular Broad Market Support Is Just Below The Market
Chart 1 below plots the S&P 500 (SPX) weekly since 2007 and highlights the most significant longer term underlying support levels. Perhaps the most important of these is the 2009 secular uptrend, which originated in March 2009. This major support level is situated this week at 2477 and is currently 2.6% below the market.
If SPX 2477 is significantly (more than 10-20 index points) and sustainably (more than a few days) broken, it would clear the way for a potentially quick move down to 2347, the December 2018 benchmark low. Below 2347, the next important support level is at 2133, the May 2015 benchmark high.
CPM, A6 Remain Risk Off/ / Negative
Our tactical models, Correction Protection Model (CPM) and Asbury 6, remain in a Risk Off / Negative status as of Feb 24th. SPX 3239, the opening price on Feb 25th — which is when and where these signals would have been executed — is 696 points or 27.4% above the market. Chart 2 below highlights CPM’s Risk On (green) and Risk Off (red) signals since 2019.