Written by Sinad Karahimetovic
Stephen Soetmeyer, technical research strategist at Bank of America, offered insights on US stocks in general as the selling intensified.
In a note sent to BofA clients last week, Suttmeier warned against testing major support in the (NYA). Later last week, buyers failed to defend the 14,000 support area, paving the way for an acceleration of selling activity.
For Suttmeier, a support breakout is a “potential bearish leading indicator of lower prices to date and a continuation of the 2022 bear market for the S&P 500 through October.” The strategist also reminded clients that seasonality remains a challenge for US stocks from late September through October.
“The highly negative seasonal SPX followed in late September and the downside breakout below 3900 to roughly test the June low at 3,636. While Friday’s downside gap (9/23) at 3727-3750, the immediate risk is lower,” Soetmeyer warns.
The strategist added that the new year-to-date decline would pave the way for a test of the 200-WMA at 3,590, while a deeper support level lies at 3,500.
“Break below the uptrend line from the early June projects to 3400 seconds on the S&P 500,” Stemmer concluded.