The Reflex Dip Buying Continues, But Don’t Get Careless

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In our previous June 20th Stock Market Update & Asbury Investment Management Video, entitled It’s Sink Or Swim Time For The Stock Market, we said:

…SPX (the S&P 500) is currently making its 7th test of the 50-day moving average just since late January.  The US broad market index must remain above this support, which is currently located at 4182 to 4161, to keep the current Tactical uptrend intact”

The red highlights in Chart 1 below show that SPX immediately rebounded from that support level on Jun 21st, the Monday after that report was written, and subsequently rose by another 4.7% into Friday’s (Jly 9th) high.  This is a good example of the importance of identifying where Tactical inflection points are in the market — places to add risk capital if they hold and remove it if they are broken.

Chart 1

Meanwhile, our Asbury 6 Tactical Model shifted back to a Positive bias one day later, on June 22nd.  This confirmed the validity of the June 21st rebound in SPX from Tactical support, as shown in Chart 1, by indicating market internals were conducive to another leg higher in the US broad market.

Table 1 below shows the current Positive status of the Asbury 6 through Friday, July 9th.

Table 1

How To Interpret The Asbury 6: The “A6” is updated daily in our Research Center.  Four or more metrics in one direction, either Positive (green) or Negative (red), indicate a Tactical 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.

So, for now, the market is amid favorable technical conditions to continue higher over the near term.  But also keep in mind that the S&P 500 has already risen by a hard-to-believe 99% since March 2020, and this has resulted in most momentum and sentiment metrics becoming extremely over-extended.  Meanwhile, market breadth is weakening.  Because of these extreme conditions, we will be keeping an especially close eye on our Tactical metrics  — including the Asbury 6 — because, when they inevitably turn Negative, the ingredients are already in place for an unusually large and nasty correction.

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
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Here is our July 9th Video Review, which explains how we have recently utilized Asbury Research’s market analysis and investment ideas to professionally manage client portfolios.

Click Here to view a brief video about our management philosophy. Feel free to share with anyone who might benefit from our risk–managed approach.

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This communication is for informational purposes only. It is not intended as investment advice, or as an offer or solicitation for the purchase or sale of any financial asset.  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.

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