Conclusion, Investment Implications, Strategy

The benchmark S&P 500 (SPX) will begin today’s session situated right on top of primary Tactical support at 4289 to 4238. This is where the US broad market index’s November 2020 Tactical uptrend must resume IF still valid.  It would take a Negative shift in both of our Tactical models (Asbury 6, Correction Proteciton Model), accompanied by a decline by SPX completely below the lower boundary of its Tactical support area at 4238, to confirm that a long overdue corrective decline is underway.

Analysis

About a month ago, in our June 18th Special Report entitled US Stocks At A Tactical Decision Point, we said:

“Almost one hour into today’s trading session, the the benchmark S&P 500 (SPX) is testing primary Tactical support at 4182 to 4168. This is where the US broad market index’s 2021 Tactical uptrend must resume if still valid.”

SPX bottomed at 4164 that day and then rallied by 6% into the 4394 Jly 14th high before subsequently collapsing into yesterday’s (Jly 19th) lows.

Chart 1 below shows that yesterday’s sharp decline has resulted in a new test of primary Tactical support, which is now situated at 4289 to 4238.  This support area represents the convergence of the Jly 8th low, Oct 2020 uptrend line, 50-day moving average, and May 7th high and is where the current November 2020 Tactical uptrend must resume if still valid.

Chart 1

Meanwhile, Table 1 below shows that, through Jly 19h, four of the Asbury 6 constituent metrics have turned to negative (red). This turns the “A6” Model itself to Negative as four or more metrics in one direction, either positive or negative, indicate a tactical bias.  

Table 1

This Negative shift in the “A6” corroborates and underscores the importance of SPX 4289 to 4238 as a Tactical decision for the US broad market, from which its next significant trending move — either up or down — is likely to begin.

However, it would take an accompanying shift to Risk Off in the Correction Protection Model (CPM,  our other Tactical model), and a decline completely (the entire daily trading range) below SPX 4289 to 4238 to confirm that a corrective decline is underway.  Until then, it is too early to assume that the current November 2020 Tactical uptrend is over and an overdue corrective decline is beginning.