S&P 500 Neutral, Non-Committal On Election Day…

Chart 1 below plots the benchmark S&P 500 (SPX) daily since June along with its 50-day (blue line, minor trend proxy) and 200-day (orange line, major trend proxy) moving averages.  The red highlights show that the US broad market index has been coiling sideways since setting a new all-time high on Sep 2nd.  This coiling price activity indicates investor indecision as the market braces for the results of today’s US presidential election.  Not surprisingly, from a pure price standpoint, the market is about as equally balanced as it gets as it awaits today’s outcome.

Chart 1

These are the key index levels to to watch today, and through the rest of this week, and why they are important:

  • 3400, the current location of the 50-day moving average, which is currently being tested.  The minor, Tactical trend remains negative or bearish below it.
  • 3525, the red upper boundary of the current investor indecision area is currently 7% above the market.  A sustained rise above this level is necessary to confirm that the larger March advance has resumed and would then target a rise well above the current Sep 2nd high of 3588.
  • 3238, the red lower boundary of the current investor indecision area is currently 2% below the market.  A sustained decline below this lower boundary would be necessary to confirm that a significant market top is in place at the Sep 2nd high and would then target a decline well below the 200-day moving average at 3130.
…But Our Tactical Models Indicate Internal Weakness

Although the S&P 500 is currently stuck in neutral, our Tactical models are not.  Table 1 below shows that all Asbury 6 constituents are Negative, and have been since October 27th.  Meanwhile, our Correction Protection Model (CPM) has been on a Risk Off status also since Oct 27th. 

Table 1

These models suggest a negative bias within the boundaries of SPX’s current sideways investor indecision pattern, with the 50-day moving average at 3400 being the likely decision point that should loosely contain SPX on the upside if the Risk Off / Negative status of these models is to remain intact through election week. 

Conversely, a sustained rise above SPX 3400 amid a shift to a Risk On / Positive bias in our Tactical models would set up a test of the upper boundary of the incision area at 3525.  However, we repeat that a move outside of the investor indecision area — either above 3525 or below 3238 — would be necessary to decisively indicate the S&P 500’s next investable trend.