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Signposts

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• When the S&P 500 (SPX) moves 10% over its 40-week moving average, the average gain before moving back below it is 10.4% in just under 11 months. The SPX reached this level in June at 988.

• The average "peak gain" (as measured by price at move over 10% above MA to peak price before a move back below 40-week moving average) over the 10 prior instances, using weekly data since 1980, was 19% over an average of 9 months.

• 80% of the "peak gain" signals produced double-digit results. The SPX is currently up 4.6% in 4 months from the 988 kick-off prices. Providing peak price gains and the time it took simply provides some Signposts along the way. We are under no illusion that we can pick the "peak price" when it comes.

• This is another example suggesting there is further upside over the coming months, reinforcing our Upside Ahead? thesis outlined in July. At worst it argues against aggressive selling because a market with this trajectory, liquidity and limited selling pressure takes time to turn and normally continues higher.

Exhibit 1 - In June the SPX was > 10% above its 40-week moving average - that hasn't been bad.



Exhibit 2 - Once the SPX gets 10% above its 40-week moving average...what comes next?

no positions in stocks mentioned
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