Key Points
- S&P 500 Trades Under Support and in a Downtrend
- Small Caps Remain Weak, Below a Key Level
- NASDAQ 100 Continues to Lag
- The 10-Year Note Makes a New Cycle Low
- Sentiment Becomes Slightly Less Fearful
Mid-Week Market Update – United States
The S&P 500 finds itself on the underside of broken support, below the declining 50 and 100-day moving averages ahead of the Federal Reserve’s interest rate decision later today. On an intraday basis, the index has been making lower highs and lower lows since peaking in January.
The 14-day RSI is near oversold levels, but we note that it did not become oversold during last week’s selling. This sets the stage for a potential bounce in the near term, but it would be countertrend in nature.
The S&P Small Cap 600 Index remains below support at 1,260 as it trades below the declining 50 and 100-day moving averages. The bears are in control of the trend, following a series of lower highs since the November peak. The 14-day RSI is near oversold levels, but also has not broken below 30.
The relative trend is bearish, dancing with the 50-day moving average below price-based resistance.
The NASDAQ 100 is testing support at the 13,000 level after failing at the declining 50-day moving average, which is below the declining 100-day moving. The 14-day RSI is holding in a bearish regime but did not become oversold as the index came under pressure last week.
The relative trend is bearish, below the declining 50-day moving average, and trading near one-year lows.
The 10-Year Treasury Note remains in a bearish trend below the declining 50 and 100-day moving averages. The Note traded to a new cycle low yesterday. The 14-day RSI is holding in a bearish regime, lending momentum confirmation to the price trend.
The Bloomberg Commodity Index continues to stall below resistance near 140, above the 50 and 100-day moving averages. We remain of the view that this stalling action is a pause within an uptrend. This view remains in place if the index is above support at the 120 level. The 14-day RSI is holding in a bullish regime.
Finally, Commodities continue to outperform equities as the ratio trades above the 50-day moving average and is approaching the recent high.
Sentiment Check
The CBOE S&P 500 Volatility Index (VIX) has moderated a bit over the past week, and we note that it did not make a higher high during last Friday’s intense selling pressure. The VIX remains above the 10-day moving average, and the trend of the moving average has remained higher since last July.
As the VIX Index moderates in the near term, the VIX Curve is no longer inverted. This is an indication that a small amount of fear has exited the market over the past week as the S&P 500 fights at support.
Take-Aways:
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