Conclusion, Investment Implications, Strategy

The benchmark S&P 500 (SPX) is currently testing major overhead resistance at 3050 to 3133, amid still-negative (bearish) market internals.  This is where the current major downtrend in the US broad market index — initiated on February 27th — must  resume to remain intact.  Put another way, it would take a sustained rise above the 3050 to 3133 area, amid a confirming shift back to a Risk On / Positive status in our tactical models (Correction Protection Model, Asbury 6), to confirm that the previous 2019 US stock market advance is reestablishing itself.

Chart 1 below shows that, as of 9:50 am CST this morning, SPX is testing major overhead resistance at 3050 to 3133.  The US broad market index started the session significantly lower, but has been buoyed — at least thus far — by this morning’s 50 basis point emergency rate cut of the federal funds rate by the Federal Reserve.  This rate cut lowered the federal-funds rate to a range between 1% and 1.25%, and is the first to occur in between a scheduled policy meeting since the 2008 financial crisis.

Chart 1

This major resistance area, which represents the 200-day moving average (orange highlights) and the underside of the December 2018 major uptrend line (red highlights), must loosely contain SPX on the upside for the current major downtrend — initiated on February 27th — to remain intact.

Put another way, it would take a sustained rise above the 3050 to 3133 area, amid a confirming shift back to a Risk On / Positive status in our tactical models (Correction Protection Model, Asbury 6), to confirm that the previous 2019 US stock market advance is reestablishing itself.  Table 1 below shows that the Asbury 6 has been Negative since February 24th.

Table 1