Key Points
- S&P 500 Is Trapped in a Range
- Small Caps Show a Hint of Relative Strength
- NASDAQ 100 Continues to Lag
- Commodities Pause in a Strong Uptrend
- Sentiment Is Still More Fearful Than Greedy
Mid-Week Market Update – United States
The S&P 500 remains below the 50 and 100-day moving averages as well as resistance at the 4,550 level. There is still solid support near 4,300. Between support and resistance, there is a war waging for control of the trend. The 14-day RSI confirms this view as it trades in the middle of the range.
The S&P Small Cap 600 is also below the moving averages. There is an added struggle in that the current price is below the range that marked trading for most of 2021. That is a lot of resistance that must be overcome before the bulls can take control. At the same time, the 14-day RSI remains in a downtrend.
On a relative basis, we have become slightly intrigued as the ratio has moved above the 50-day moving average to test price-based resistance. Moving through this resistance point would be a positive sign for Small Caps; we are watching closely.
The NASDAQ 100 completes the trifecta of major U.S. averages trading in a range between support and resistance and below the 50 and 100-day moving averages. Holding below the February 2nd high prompts us to move resistance down to the 15,100 level. Support remains near 14,100. The RSI is in a downtrend and holds within a bearish regime.
On a relative basis, the ratio is below resistance and the declining 50-day moving average. These levels must be broken to the upside to be confident that this index is taking a leadership position.
The 10-Year Note remains in a clear downtrend, below the declining 50 and 100-day moving averages and resistance at the 128 level. There is room for further downside to the next support level near 125. The 14-day RSI lends a momentum confirmation to price weakness, trading in a bearish regime.
The Bloomberg Commodity Index is trading near one-year highs, above the rising 50 and 100-day moving averages but continues to pause after a strong rally to start the year. The breakout level at 106 is a logical point of support. Below that, holding the rising 50 and 100-day moving averages would keep the trend in favor of the bulls. The 14-day RSI is working off an overbought condition.
The relative trend remains above the breakout level, which we would expect to provide support in the near term.
Sentiment Check
The CBOE Volatility Index (VIX) remains holding above 20 after another spike this week. We continue to be intrigued by the fact that the 10-moving average is carving out higher highs and higher lows. As the major indexes are trading below their moving averages, it would not be surprising to see volatility remain elevated.
The CNN Fear and Greed Index was flat on the week, holding at 37 and in a “fear” position.
Take-Aways:
For all the news surrounding the Fed and Russia, there was no change to the trends for major assets that we cover. U.S. equities remain trapped in trading ranges below their moving averages. Commodities are still the strongest trend despite taking a breather. Treasuries are under pressure. At the same time, the VIX is trending higher, and sentiment remains fearful.
Disclosure: This information is prepared for general information only and should not be considered as individual investment advice nor as a solicitation to buy or offer to sell any securities. This material does not constitute any representation as to the suitability or appropriateness of any investment advisory program or security. Please visit our FULL DISCLOSURE page.