Bear Market Rally, Or Resumption Of 2009 Advance?

In our previous April 7th Stock Market Update, we pointed out that our Asbury 6 tactical model had just moved to an equally-balanced, Neutral reading of 3 green (Positive) and 3 red (Negative) constituents, after previously turning Negative on February 24th as shown in Chart 1 below. 

(Click on image to enlarge)

Chart 1

The rightmost green arrow on the chart also shows that the “A6” turned back to Positive a day later and subsequently rose by 220 points or 8.3% into the 2879 April 17th high — but has since pulled back a bit over the past few days.

Chart 2 below shows the reason for this recent minor pullback: The benchmark US index ran into a formidable cluster of overhead resistance at 2822 to 2856, which represents the August and October 2019 benchmark lows (red highlights) and the 50-day moving average (minor trend proxy, blue highlights). Ken Tomko of our sister company, Asbury Investment Management, discusses this overhead resistance — and how we have navigated it thus far in real-time — in this week’s video.

(Click on image to enlarge)

Chart 2

This test of resistance sets up an important Tactical decision point for the US broad market. If the current sharp rebound from underlying support at SPX 2193, the August 2016 benchmark high (green highlights), was just a corrective rebound within an uncompleted bear market, then the larger February decline is likely to resume from overhead resistance at 2822 to 2856. If this resistance area is broken to the upside, however, it would suggest the larger March 2009 uptrend may be resuming.

Our tactical models, the Asbury 6 and the Correction Protection Model (CPM) will confirm near term direction for us — as it happens.

Disclosure: None.

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