September 21, 2021
The S&P 500 has been holding up relatively well in the only historically bearish month of the year after price trend deceleration in late August signaled moderate downside. At the moment, the SPX is down ~4.7% from it’s 9/2 peak, which remains inline with other drawdowns this year in the 2-6% range. The SPX is currently trading slightly below first level technical support in the 4365-4435 range, but the close matters most. If that support gets taken out, we see much stronger secondary support at the 4240-4260 level. The broader technical structure, market internals and cross markets still show no signs of a top. We’re watching it closely, but expect these levels to hold with decelerated broad equity market upside in Q4. The cyclical/value sectors remain more compelling opportunities than growth sectors and we continue to see risk for Tech multiple compression if real yields rise much further. Ten-year real yields are now at -0.96 with a risk of Technical multiple compression starting at levels above -0.88.