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The 2022 Major Downtrend Resumes With A Vengeance
Introduction
In our previous April 12th Stock Market Update & Asbury Investment Management Video, we said the benchmark S&P 500 (SPX) was at a tactical decision point, perched right on top of tactical support at 4427, and said “this is where the current rally from the index’s late February lows must resume if is still valid.”
A day later, on April 12th, the Asbury 6 turned Negative or bearish.
The Asbury 6: Negative Since April 12th
The Asbury 6 is our in-house Tactical model that indicates whether the US stock market is in a Risk On (staying invested or adding additional risk) or Risk Off (tightening protective stops on existing positions or reducing risk) environment. Through Friday, April 22nd, Table 1 below shows that the “A6” remains on an April 12th Risk On status after previously being Risk On since March 17th. The S&P 500 has declined by 2.9% since then.
Table 1
As long as the “A6” remains Negative, the US stock market will remain vulnerable to more weakness and a deeper decline.
Editor’s Note: The Asbury 6 is our own quantitative risk management model which is updated daily in our Research Center. The “A6” is a combination of six diverse market metrics that we grouped together to look beyond the day-to-day, up-and-down noise of the stock market to determine its actual health — in much the same way that a doctor first checks the patient’s vital signs during an office visit. Four or more metrics in one direction, either Positive (green) or Negative (red), indicate a Tactical market bias. The dates in each cell indicate when each individual constituent of the A6 turned either positive (green) or negative (red). When all Asbury 6 are positive, market internals are the most conducive to adding risk to portfolios. Each negative reading adds an additional element of risk to participating in current or new investment ideas.
Weekly Summary / Key Levels To Watch
The benchmark S&P 500 (SPX), as shown in Chart 1 below, finished Friday’s session at 4272, down 121 points or 2.8% for the week. The US broad market index is now down 494 points or 10.4% for the year. What’s worse is that next week kicks off a sustained period of seasonal weakness in SPX that extends through September.
Chart 1
The green highlights show that the next underlying support area in the S&P 500 is just an additional 1.2% below the market at 4238 to 4223 and represents the May 2021 high and Jan 24th low. Primary Tactical support is 3.7% below Friday’s close at 4158 to 4115 and represents the Feb 24th and Mar 8th lows.
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