Key Points

  • Lower Lows for the S&P 500 and NASDAQ Composite
  • Small Caps are the Best of the Bunch in the U.S.
  • Global Equities Consolidate but the Relative Trend is Stable
  • Commodities Begin to Lead Equities
  • 10-Year Note Holds Support but there is Work to Do

The S&P 500 remains in a bit of a “no man’s land” despite a strong rally on Friday. The weekly charts show us that last week’s low undercut the low from the previous week. At the same time, the index is trading between the 10 and 40-week moving averages while holding above important support at the 4,200 level.  Until the 10-week moving average is retaken, odds favor choppy trading will persist.

The 14-week RSI remains in a bullish regime but is still moving to the downside. Equity bulls want to see this indicator make a low above 40.

The S&P Small Cap 600 was the star of the show last week as this index did not make a lower low last week and held above the rising 40-week moving average. While Small Caps remain in the range that has marked trading since March, we are encouraged by the fact that the 14-week RSI is beginning to turn higher and has remained in a bullish regime throughout the consolidation.

On a relative basis, Small Caps continue to stabilize and are now in the process of breaking the downtrend from the March peak.

At the sector level, the four best performing groups within Small Cap were:

  • Energy – a leader for a third consecutive week after holding support.
  • Financials – breaking near-term resistance, new highs next?
  • Materials – still has a lot of work to do.
  • Health Care – trying to break near-term resistance, not there yet.

Like the S&P 500, the NASDAQ Composite Index made a lower low last week, a key point for those making a bearish case for stocks. The bulls will point to the fact that the NASDAQ has held support just above the rising 40-week moving average despite trading below the 10-week moving average. Thus far, the 14-week RSI is holding a bullish regime, but the indicator has not found a bottom yet.

The relative trend is rolling over, and we are closely watching support.

U.S. Fixed Income

The 10-Year Note came under pressure once again last week, pushing price down to an important support level before a rebound began to unfold. Those who are partial to candlestick charts will notice that last week’s action created a “bullish hammer” candle, making this week key as we look for upside follow through. Last week’s test of support did leave a bullish RSI divergence in place as the indicator made a higher low. However, it will take a break above the 10 and 40-week moving averages to convince us that the trend is truly reversing. 

Rates have begun to pull back across the curve after strong moves to the upside. In all cases, higher lows have been made, and near-term resistance levels have been broken.

Global Equities

The Global Dow closed below the 10-week moving average for a third consecutive week after breaking the uptrend line from the March 2020 lows. The 14-week RSI continues to move lower as it tries to hold a bullish regime. Remaining in the consolidation appears to be the highest probability event.

On a relative basis, the Global Dow remains below resistance but continues to stabilize in the near term. A break of resistance would a reason to become more constructive in equities outside the U.S.


The Bloomberg Commodity Index arguably represents the best asset class now, trading to new highs, well above the rising 10-week moving average. The 14-week RSI has broken the downtrend and is moving into an overbought position, a sign of bullish momentum.

Last week we pointed out that the relative trend was on the verge of a breakout. This week, we highlight the fact that the breakout is in progress, increasing the odds that commodities will lead equities in the near term.

Within the commodity complex, Energy is a clear leader, but Agriculture is breaking out:

  • Precious Metals – near-term trend is bearish, but support continues to hold.
  • Industrial Metals – holding near the recent highs, still in an uptrend.
  • Agriculture – breaking up and out of the consolidation.
  • Energy – new highs.

The Dollar

The U.S. Dollar Index continues to rally, leaving one last key level to overcome. Last week saw this level tested before price faded into the close of the week. Pull backs are likely to hold the rising 10-week moving average as the 14-week RSI makes higher lows.


The collapse in the 10-Year Note, and the move higher in rates across the curve, are the key drivers of price action across asset markets. As rates rise, Small Caps are likely to remain leadership along with Commodities. In the near-term, choppy trading for the S&P 500 and NASDAQ Composite are likely to persist. 
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.