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U.S. and Global equities closed below key support levels and their 10 and 40-week moving averages, strengthening the bearish case. Investors should be open to the June lows being tested while waiting for sustained rallies before becoming more aggressive on the bullish side of the ledger. Treasuries remain an “unsafe” haven, closing at cycle lows last week while the broader fixed income space did the same. Commodities were not spared, and we now look for a key support zone to be tested. The dollar remains a key risk proxy and is inversely correlated to other assets.

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U.S. Equities

The S&P 500 closed the week below the closely watched support level at 3,900 as well as the 10 and 40-week moving averages. These dynamics put the index into a defensive posture despite the 14-week RSI holding above 40. Investors should be open to the idea that the June lows could be tested. Bulls may be better served to wait for signs of a durable reversal before becoming more aggressive.

The S&P Small Cap 600 Index also closed below price-based resistance at 1,200 and the 10 and 40-week moving averages. This keeps a bearish bias to the trend even as the 14-week RSI is above the 40-level. The June lows remain in play for Small Caps.

The relative trend remains neutral, below price-based resistance.

The NASDAQ 100 Index closed lower on the week, moving below the key 12,000 level while remaining below the 10 and 40-week moving averages. Given these dynamics, it is hard to make a bullish case on this group despite the 14-week RSI holding above 40. Here too, the door remains open for the June lows to be tested.

The relative trend continues to trade below resistance and is heading lower. Odds favor continued underperformance.

U.S. Fixed Income

The 10-Year Note marked its lowest weekly close of the downtrend that began in late 2020. The Note remains below the 2018 lows and the 10 and 40-week moving averages, keeping the bears in control of the trend.

The yield remains above resistance at the 3.20% level and has pushed through the June peak, increasing the odds of a move toward 4.00%.

Rates moved higher across the curve last week. The two, five, twenty, and Thirty-Year rates are all now above their June peaks. This begs the question, with rates above their June highs, will we see equities below their June lows?

The iShares Core U.S. Aggregate Bond ETF (AGG) logged its lowest weekly close of the current downtrend. The fund remains well below the 10 and 40-week moving averages and the key $104 level. The bears are clearly in control.

Global Equities

The Global Dow is beginning to break price-based support below the 10 and 40-week moving averages. The 14-week RSI is also pushing below 40, indicating that momentum is still in favor of the bearish price trend.

The relative trend remains under pressure, near the late 2021 lows, despite some outperformance last week.

Commodities

The Bloomberg Commodity Index closed below the 10 and 40-week moving averages last week, putting the support zone between 106 and 110 in play on the downside. The 14-week RSI is holding above 40, but bulls want to see the index back above the moving averages before becoming more aggressive. A close below 106 would indicate that the bears have taken control of the trend.

Trends are mixed under the surface of the commodity complex. Precious Metals remains under pressure after breaking support while Industrial Metals are holding a key level. Outperformance by Industrial Metals over Precious Metals will likely keep a tailwind behind rates. Energy is fading and has an outsized impact on the asset class. Agricultural remains a bullish standout after holding support.

U.S. Dollar

The U.S. Dollar Index traded down to the 10-week moving average last week before rebounding to close in the upper part of the range. The index remains well above the rising 40-week moving average. The dollar continues to trade as a haven asset and remains inversely correlated to risk assets. Momentum remains bullish, with the 14-week RSI at overbought levels.

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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.