The S&P 500 Continues To Rebound As It Moves Into Its Monthly DMA Channel

Our last update was on August 1st. Stocks continue to move higher through the first half of August and more indicators are turning upward. The S&P 500 rose 9.11% in July after dropping -8.39% in June. Year to date now the S&P 500 is down -9.84% through Monday’s close. The low on the S&P 500 was -23.07% on June 16th. One month does not mean the end of the yearlong misery, but we are now three months with positive action and a long way from the June lows.

In our last Bias Indicator update on the major equity indexes, the only periods that had strength were the Daily and Weekly (see July 29th Table). Now the Monthly is starting to see U.S. Equity Indexes move back into their DMA Channels (see August 15th Table).

July 29th Table

August 15th Table

Two weeks ago we noted, “The trick in August is going to be getting the indexes into their monthly DMA Channel first and then above the channel”. The S&P 500 and the other indexes have now made it into the Monthly.

The reality is that it may take a couple more months to get back above the monthly DMA Channel. The upper band of the Monthly DMA Channel is 4669.57. That is another 372.43 points from here or 8.67%. So far, the S&P 500 has been below the monthly DMA Channel over the last five months.

Once we entered a fifth month below the monthly DMA Channel in August then we entered the 2000 to 2002 period and 2007 to 2009 as the only periods with a longer duration below the monthly DMA Channel.