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With the summer rally in stocks seemingly on hold, one technical strategist has put together a list of pros and cons that could help investors clarify their thinking about where the market is headed next.

Thetactical, or near-term, uptrend for the S&P 500 has some room to run, according to John Kosar, chief market strategist at Asbury Research.

According to a Tuesday note to clients, the bearish trend in stocks that began in January remains intact, even if it has been tested by the summery rally.

Kosar said that it would take Wall Street's "fear gauge" to make a sustained run back above 24 to indicate that this week's stock market decline has legs.

In September, the DOW tends to slump. One of the market's unresolved mysteries is why.

There are other factors that suggest the recent decline could continue.

Kosar divides them into tactical factors, which are likely to play out in the coming weeks, and strategic factors, which are likely to happen in the coming months.

Source: Asbury Research

There are more details on each factor below.

  • Price and trend (near-term bullish, intermediate-term bearish): Despite the sharp decline that started at the end of last week, the S&P 500 still is in a minor tactical uptrend. This trend will remain intact until the S&P 500 tumbles back below 3,946, according to Kosar.
  • Movement in influential stocks (near-term bullish, intermediate-term bearish): Like the S&P 500, Inc., AMZN, +0.30% the fourth-largest U.S. stock by market capitalization, recently bounced off an important resistance level (in both cases, the resistance was the 200-day moving average). Whether Amazon breaks above this resistance level, or heads lower first, could have major implications for both Amazon shares, as well as the broader market.
  • Market internals point higher (near-term bullish): Asbury’s “A6” model of market internals remains biased in favor of further gains for stocks. This model is based on six factors: the rate of change in the S&P 500, relative performance in stocks and high-yield bonds, asset flows into U.S. stocks and stock funds, corporate-bond spreads, trading volume and market breadth.
  • Volatility (near-term bullish): As mentioned earlier, Asbury views a VIX of at least 24 as the line of demarcation between a tactical buying opportunity in the S&P 500 and a sustainable market decline. The VIX was pegged at 23.67 Tuesday, up nearly 15% on the week so far.
  • Asset flows (near-term bullish): Unlike most of the earlier factors, this one relies on the Nasdaq-100 via the Invesco QQQ exchange-traded fund QQQ, -0.08%. According to Asbury, net assets flowing into the popular exchange-traded fund have been above their 21-day moving average since July 6. It would take a decline in these assets back below their 21-day moving average to suggest that the recent pullback in the index has legs.
  • Overbought vs. oversold (near-term bearish): The S&P 500 appears to be pulling back from what Kosar described as “monthly overbought extremes.” Similar patterns emerged in the previous, three minor market tops that have occurred since December. Could this be the fourth?
  • Market breadth (intermediate-term bullish): The percentage of New York Stock Exchange stocks that are trading above their 200-day moving average is back above 40% from a near-term low of just 18% from July 1. Strong market breadth bodes well for stocks, Kosar said.
  • Strategic price momentum (intermediate-term bullish):  The S&P 500’s 13-week rate-of-change has edged back above the zero line as of Aug. 5. But this line is presently being tested. If it holds, it could indicate that the market won’t return to the June lows soon.
  • Seasonality (near-term bearish, intermediate-term bullish): Historical market data show the first two weeks of July are typically the two strongest weeks of the entire third quarter for the S&P 500, based on data since 1957. Following this, the index often gradually weakens heading into September.
  • Growth vs. value (near-term bullish): Simply put, growth stocks that are also members of the S&P 500 have been outperforming value stocks in the S&P 500 since the recent market uptrend began. This is indicative of improving risk appetite, which typically bodes well for stocks.

Technical analysis is more art than science, and there is room for disagreement, according to a professor.

The S&P 500 fell for a third day in a row on Tuesday, while the DJIA lost for the longest time in a month.