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Key Points

  • S&P 500 Readied for a Fight at Resistance
  • Small Caps Hold Above the 50-Day Moving Average
  • The NASDAQ 100 Needs to Build on Recent Strength
  • Commodities Remain in a Long-Term Uptrend
  • The 10-Year Note Continues to Build a Base

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Mid-Week Market Update – United States

The S&P 500 is doing battle with resistance in the 3,900 – 4,000 zone and the 50-day moving average. The index is still below the declining 100-day moving average, which is coming into line with the early June peak. Thus far, the rally from the June lows has done nothing more than producing a lower high, keeping the bears in control of the trend. Holding above the 50-day and then moving above the 100-day are needed for the bulls to continue to make a strong case.

Momentum remains in a bearish regime, unable to break above 60 on the current rally attempt.

The S&P Small Cap 600 is also trading between the 50 and 100-day moving averages after rallying from support recently. The trend remains bearish for now, and momentum confirms this view as the 14-day RSI has not been able to break above the 60-level.

The relative trend remains neutral, dancing with the 50-day moving average while holding below the key October/November peaks.

The NASDAQ 100 is above the 50-day moving average but below the 100-day moving average as it tries to stabilize the downtrend that has been in place for most of 2022. The index is holding above support but still has work to do before a stronger bull case can be made.

The relative trend is holding above the 50-day moving average, but we are hard pressed to make the call that it is returning to a leadership position.

The 10-Year Note has reached a key inflection point in its basing process as it trades into resistance at the declining 100-day moving average after regaining the 50-day moving average. Support remains at the 2018 lows. Closing above $121 would be a sign that the trend is reversing in favor of the bulls. Breaking support sends the opposite message.

The 14-day RSI is holding in a bearish regime for now.

The Bloomberg Commodity Index remains below the 50 and 100-day moving averages, and the 50-day is crossing below the 100-day. However, the index remains above the key support level at 106. If this is the case, the long-term trend remains bullish. Retaking the moving averages would be a sign that the bulls are reasserting control. The 14-day RSI is bouncing from oversold levels but still needs to clear the declining trendline.

The relative trend remains below the recently broken 50-day moving average, which has started to turn lower.

The CBOE S&P 500 Volatility Index (VIX) and its 10-day moving average continue to work to the downside. Both have recently made a lower low as risk assets have rallied. A continuation to the downside would be a welcome tailwind for equity bulls as the major averages look to build on recent strength to break their bearish trends.

The ATRs across timeframes continue to move in a more bullish direction in the near term. The 21-day metric has broken its uptrend, and the 63-day metric is on the verge of doing the same. The 126-day ATR still has work to do. Should these metrics continue to move lower, it would be a positive development for equity bulls.

Despite near-term improvements in volatility data, the CNN Fear and Greed Index is in a “fear” position. The current reading of 35 is down from 38 last week.

Source: CNN.com

 

Take-Aways:

Improvements from the June lows have pushed the major U.S. indexes above their 50-day moving averages, but they all remain below their declining 100-day moving averages. While the bulls have done a nice job of fighting off their backs, it is still too soon to say that they have taken control of the match. Momentum remains in a bearish regime for now. Continued declines in the volatility markets could be the added push that the bulls need to turn the tides. The 10-Year Note continues to build a base but needs to break $121 to claim that the trend has turned higher. Commodities remain above important support, keeping the long-term trend in favor of the bulls.

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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.