the benchmark sp 500   is in the midst of a major downtrend that was initiated in late january of this year the us broad market index is currently vulnerable to a much deeper decline due to an increasing number of factors including weak market internals and elevated volatility a breakdown below critical underlying support at spx 4158 to 4115 which is currently being tested could trigger an additional 12 to 17 decline which would equate to a 30 collapse from the january alltime highs the upper panel of the chart below plots the sp 500 weekly since mid 2018 with a corresponding chart of the index’s 13week quarterly rate of change in the lower panel the rate of change roc is the speed at which a variable changes over a specific period of time roc is often used when speaking about momentum the red highlights between both panels show that spx’s 13week rate of change has been negative below its zero line since january 21st and also that this metric closely defined the index’s previous two significant declines between february and may 2020 and between october 2018 and february 2019 as long as the 13week rate of change remains negative the current quarterly us broad market decline will remain valid and intact the table below shows that through tuesday april 26th all asbury 6 constituent metrics are negative red the “a6” model itself has been on a negative status since april 12th and the sp 500 has declined by 53 since then the asbury 6 is one of two asbury research tactical risk management models it was designed to help investors determine what the real daytoday condition of the market is in an environment where computer driven trading which dominates daily stock market volume has made investing in equities much more nervewracking and confusing as long as the asbury 6 remains on a negative status as it is now any market rallies that emerge are likely to be unsustainable and shortlived how to interpret the asbury 6 four or more metrics in one direction either positive green or negative red indicate a tactical 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 equity risk to portfolios each negative reading adds an additional element of risk to participating in current or new investment ideas in addition to currently weak market internals as indicated by the asbury 6 the chart below shows that the 2nd quarter seasonal pattern in the sp 500 also turns sharply negative this week the green highlights in the chart below show that the first three weeks of april which have just passed include three of the four strongest of the entire 2nd quarter in the sp 500 based on data since 1957 the chart also shows that this week kicks off a sharp bearish change in this seasonal pattern during which six of the next ten weeks through june are negative the next chart plots the sp 500 daily over the past year along with its 200 and 50day moving averages widely watched major and minor trend proxies the green highlights show that the index is currently testing critical underlying support at 4158 to 4115 which are this year’s february 24th and march 8th lows as of midday today spx clearly “sees’ this support area is trying to rebound from it however the current major downtrend will remain valid as long as the index remains below major overhead resistance at 4495 to 4513 which represents the 200day moving average and the april 21st high moreover especially considering currently weak market internals and bearish seasonality a breakdown below the 4158 to 4115 area could trigger a much deeper decline potentially another 12 to 17 lower to test longer term underlying support at the 3588 and 3394 levels after a decade of historically low interest rates and a federal reserve that had the market’s back at every turn things have changed covid 19 has moved from pandemic to endemic status inflation has emerged in a big way and the fed has initiated a new tightening cycle to throw a wet blanket on a toohot economy meanwhile the war in eastern europe has injected an acute level of uncertainty into global economies and financial markets do not like uncertainty all of this has resulted in a relatively new major downtrend in the us stock market and a wide array of technical and quantitative factors including weak market internals and 2nd quarterly seasonality warn that things could get a lot worse before they get better hope for the best but plan for the worst click here to subscribe to our youtube channel