In the third week of October, our Simple Rule finally signaled a change: while still giving an overall bullish signal on the S&P 500 index, it did so with a caution message attached.
Our Simple Rule is based on two fundamental buckets of analysis—one fundamental and one technical. A few weeks ago, the fundamental bucket turned bearish, and this happened due to the breakdown in US economic reports.
In our system, the bearish signal in the fundamental bucket proceeded to activate the technical bucket. And the technical analysis that we use is still—as of the end of October—bullish on the S&P 500 index.
As a result, we remain bullish on this large cap index. However, this bullish signal is now closer to reversing (to a bearish signal) than it has been since the beginning of this year.