In a pre-opening note to Asbury subscribers on Thursday September 17th, we pointed out unusual asset flow activity in the S&P 500 SPDR (SPY) since Monday that resulted in a Jenga-like top heavy condition in the US broad market, making it vulnerable to — and helping to light the fuse for — Friday’s collapse. The following is an excerpt from that note.
The green highlights in the chart below show that the total net assets in the S&P 500 SPDR (ETF) expanded by $4.1 billion or 2.4% on Wednesday, for a total expansion of $16.6 billion or 10.3% since Friday September 11th.
This indicates that the market has quickly become top-heavy this week, as the red highlights show that over 10% of the total assets invested have been added at S&P 500 (SPX) 1948 or higher – which is Monday’s low.
This represents a pretty aggressive bet by the market that the Federal Reserve will leave interest rates unchanged this afternoon, a bet that will quickly put more than 10% of the assets invested in SPY into the red on a decline below SPX 1948.
We have since updated these data, and their potential implications on next week’s US market direction, in our Friday Weekly Wrap-Up report which Asbury Research subscribers can view by logging into the Research Center.
Interested Investors can request a sample copy of Friday’s report by typing “Weekly Wrap-Up” in the Reason For Inquiry box from our Contact Us page.