Asbury 6 Turns Negative as Macro Pressures, NDX & SOX Weigh Down Wall Street

0:00Let's talk about these markets. Joining us now is John Kosa, who's the chief market strategist, portfolio manager over at the Asprey Research. John, thanks so much for your time. Good morning to such a busy day here. What's the Asprey 6 telling you this week? Well, it's been negative since August the 31st. So when you bring up the graphic, you'll see that there are two green constituents and there are four red. There we go. So the two green, the two that are still positive or green are the relative performance between stocks and high yield bonds and also volatility. Volatility has stayed pretty low throughout some bumpy times. Let's call them. But you can see the four that are negative are the rate of changing the S&P. Investor asset flows into the S&P 500 trading volume and market breath. So again, the market's down about 1.5% since the Asix went to four or more red.

1:01So heading into an important day, at least the tactical internals of the market are leading down. Okay. And you know, there is some September's seasonal weakness here as well. People have been talking about that. But what we have seen under the surface, John, is a great deal of rotation. I mean, that was very evident on Monday. In fact, it was quite violent, particularly when you take a look at the subsectors in technology. What are you seeing as far as the sector asset flows right now? The sector rotation has been as fast and furious as I can remember ever seeing it. We have a model. Our SEAF model is our sector rotation model. There it is on the screen. And for the past quarter, the past 13 to 15 weeks, let's say, the rotation has been gyrating week to week from big money flows, fast money flows going into technology.

2:01And then the next week, they're out of technology and they're in the healthcare. And then they're back to tech and then they're back to healthcare. I've never seen it like this. I think the reason for this, the reason doesn't matter, right? Because we all get paid the same by being right on the market. But the market can discount bad news very well. It did so with COVID. But what it can't discount is uncertainty. And there's been a lot of geopolitical messaging coming out of Washington. I think that's kind of thrilled the market for a loop. These managers are trying to stay ahead of the next tweet. We're talking about the war. The war is on. The war is off. The war is on. Terrorists are off. We've got an election coming up. Right? And a couple of months. And now we've got a big fed day here that could make a splash in the pool. So the rotation indicates indecision. And if you look at the S&P 500, it's been as flat as a pancake for about three or four

3:02weeks, sitting right on some really important support around 79 even, 7,900 as long as is long, sorry, 7,600. It's actually 7,621 to just under 7,600. If the market can't hold that and it's starting to break down through there cautiously, but if it can't hold that level, there you see we're at 7,607 right now, we're sitting right on it and have been for three weeks. If we break down through there, we're starting to see some deterioration and volume. That's also not a good sign. The thing that we haven't seen yet is to spike in the VIX. We need some fear. If we're going to have a correction, fear needs to be there, it's not there yet. So that's what I'll be watching closely between now and the end of the week after we get the meeting behind us to see what volatility looks like and if there's any indications of fear. Yeah, there's 7,600 level. I mean, we're really just hanging in there. We lost it yesterday,

4:04we've stabilised a bit today, but it just feels like this was kind of described the other day as certain sectors like a branch sticking out the side of a cliff and you're just kind of hanging on as hard as you can. You've had your Denny out this morning, basically revising his most bullish target here on Wall Street of 8,400 down to 79,000. He's delayed that now to mid-2027. It's not dead in the water by any means, but basically saying that the risks of a downturn have increased over the next three to six months, which perhaps speaks to what you're saying here. I mean, we've got the feathers afternoon, the market pretty much knows what it's going to do. They just don't know what it's going to say. What else are you watching as the next sort of major catalyst here, John? Kind of focused on looking at semiconductors, also technology, both of the NASDAQs. The NASDAQs have been underperforming the S&P on a quarterly basis for months. They had a little

5:10bit of a recovery, but they're starting to roll over again. The SOX has been underperforming on a quarterly basis. This would be SOX versus Spy or SPX, whichever you like to use. But without technology, the markets can have a hard time moving higher. You could see, it looks like we peaked here months ago in the SOX and we're starting to roll over there. So that's important. If this thing's going to go higher, I think the 7600 level in the S&P has to hold. That was where we broke out from and the market was going sideways for 10 weeks. We stay up about 7,600. It targets a move up to 8,000. Below 7,600, and again, I'm watching tech, I'm watching SOX. Without that leadership, it's going to have a really hard time moving higher from here, especially with all the uncertainty in the market. Every other day, it seems like the ground is shifting under these managers that are trying to stay with their benchmarks. So it's dicey here. I think it's going to be,

6:15it could be a bumpy rest of the week. Yeah, for sure. And then of course, it's over to the earnings, which obviously starts in another month and we'll see if we can continue to see that strength we saw in Q2. John always appreciate it. Thanks for so much for joining us today, John Posar. Chief Marker's Strategist Portfolio Manager, Asprey Research, coming up.