While two months have passed, our Simple Rule continues to work. The rule signaled a bullish stance back in May, and in fact the S&P500 has risen since then.
Today, at the end of July 2019, our Simple Rule remains bullish, on the S&P500 index overall. As a reminder, this signal does not pertain to any individual component of the S&P500, but to the aggregate of the 500 components.
While both the fundamental and technical categories of our Simple Rule are bullish, the fundamental component is still edging closer to generating a bearish signal. If the US economy moves towards contraction (and judging by the fact the the Federal Reserve is scheduled to lower interest rates today…for the first time since 2007….it’s looking more likely that a recession is approaching), then we expect that this fundamental signal will rapidly switch to being bearish.
Let’s see what happens to US economic data in August.