The thing here is that this line is back down to levels not seen since March of 2000.
Out of curiosity, do you remember what happened right after March of 2000?
In case you weren't around, that exactly when the dot com bubble peaked and stocks prices really accelerated to the downside.
We know that the market has memory. These aren't just random moves up and down. We know. We have the data.
So if this former level of support, becomes support once again, then what does that mean for stocks?
Well I'll tell you that if this line is going up, I'm not trying to be very long of stocks. I want to be much more defensive in that sort of environment.
And to be clear, Consumer Staples just closed last month at their lowest levels in history relative to the S&P500. So the trend here, as of now, is certainly NOT up.
But potential support is potential support. We can't ignore that.
Look for any kind of a bounce here in Staples relative to S&Ps (XLP/SPY) to put pressure on stocks.
I can't think of anything more bullish than for this line to just pierce through those former support levels like they aren't even there.
Something like that would take the S&P500 up towards 6800-6900.
I need to see it though. And we're just not quite there yet.
I'll be back next week and I'll be hosting our LIVE Mid-Month Video Conference Call for Premium Members of ASC Research.
If you're already a member, you'll receive an invite link shortly.
If you're NOT already a premium member of ASC Research, you can click here to get a RISK FREE trial and join us at our next LIVE event, once I'm back from out of town.
Take care of the place while I'm gone.
Don't let these guys give you any shit. Try to keep them in check for me!
- JC
