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S&P 500: 3700 A Major Inflection Point

In our previous September 11th Stock Market Update & Asbury Investment Management Video, we said: 

“… the US stock market’s next Strategic trend through year-end and potentially into 2023 is likely to begin from right here.  As long as the Asbury 6 remains Negative as it is now, this move is likely to be lower and would likely result in a retest of the June lows.”

That test of the June lows near S&P 500 (SPX) 3600, which equates to a 10.3% decline from where the index was at our last report, is taking place right now.

More Pain Or Buying Opportunity? Market At A Major Decision Point

Chart 1 below, which plots SPX daily since 2020, shows that the US broad market will begin next week just above formidable underlying support at 3637 to 3588, which represents the Jun 17th low and the September 2020 benchmark high. 

Chart 1

significant (more than just a few index points) and sustained (more than just a day or two) decline below 3588 would clear the way for a potential decline to the next major support level at 3394, which is 8.1% below Friday’s close and represents the Feb 2020 benchmark high.

The Asbury 6: Negative Since Sep 13th

Table 1 shows that, through Friday Sep 23rd, all of the Asbury 6 constituent metrics are red (negative).  The “A6” model (access requires subscription) itself has been on a Negative status since Sep 13th.  The benchmark S&P 500 has declined by as much as 94 points or 7.3% since then.

Table 1

How To Interpret The Asbury 6:  Four or more metrics in one direction indicate a Tactical bias. When the Asbury 6’s constituent metrics are equally balanced at 3 positive and 3 negative, the model retains the current directional status.  The dates in each cell indicate when each individual constituent turned either positive (green) or negative (red). When all Asbury 6 are positive, market internals are the most conducive to adding equities exposure to portfolios. 

The Bottom Line

The benchmark S&P 500 (SPX) will begin next week just above formidable underlying support at 3637 to 3588, which represents the mid-June lows and the September 2020 benchmark high.  Meanwhile, seasonality data since 1957 shows that next week is the seasonally weakest of the entire year, after which the US broad market index historically stabilizes during October and leads into the 1st and 3rd strongest of the year in November and December.  Accordingly, we will be watching for signs of an emerging buying opportunity in the weeks ahead but, until then, we remain in a defensive, Risk Off mode.

Click Here for The Asbury Approach To Investing video for September 2022.

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Disclaimer: This is provided for information purposes only and is not intended to be a solicitation to buy or sell securities. The performance indicated from back-testing or historical track record may not be typical of future performance. No inferences may be made and no guarantees of profitability are being stated by Asbury Research LLC. The risk of loss trading in financial assets can be substantial. Therefore, you should carefully consider whether such trading is suitable for you in light of your financial condition.

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