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According to John Kosar, director of research at Asbury Research, technical indicators suggest stocks are within weeks of an intermediate-term bottom. He points to the S&P 500’s test of and aggressive rebound off its 200-day moving average this week as evidence of such.
Even so, there is a short list of hurdles the S&P 500 needs to overcome before it resumes its bullish stride, says Mr. Kosar:
- The S&P 500 needs to break and remain above an overhead resistance band of 2064 to 2070. The index closed at 2041.51 Wednesday.
- The index needs to turn positive on a percentage basis from its same level a month ago.
- Exchange-traded fund asset flows need to show sustained improvement, trending above their 21-day moving average. According to Asbury, daily net assets invested in the SPDR S&P 500 ETF declined below their 21-day moving average January 12 to indicate a monthly trend of contraction.
- The CBOE Volatility Index needs to drop below its 50-day moving average of roughly 17 and stay there for a few days in order to suggest the market is complacent enough to advance to records. It finished Wednesday at 18.33.
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