In our previous June 3rd Stock Market Update & Asbury Investment Management Video, we said the major trend in the benchmark S&P 500 (SPX) appeared to be turning back to positive but also pointed out that minor overhead resistance existed just above the market at 3215.
Chart 1 below, an updated version of the one from that report, shows that SPX tested 3215 resistance on June 8th, failed there, and has since collapsed by 249 points or 8%, back into a band of major underlying support at 3017 to 2927.
(Click on image to enlarge)
Chart 1
This cluster of support, which represents the 200-day moving average (major trend proxy, orange), the April 29th high (green), and the 50-day MA (minor trend proxy, blue), is where the current advance must resume if the larger 2009 secular uptrend is still intact.
If SPX fails at this support, however, and is confirmed by a Negative / Risk Off shift in our tactical models (CPM, Asbury 6), it would indicate the March recovery has failed and — especially amid the current economic environment — open the door for a potentially nasty decline.
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