Key Points

  • Record Highs for the S&P 500 and NASDAQ
  • Small Caps Remain in the Range & Continue to Lag
  • The 10-Year Note Breaks Out Then Fades, Now Testing Support
  • Commodities are Strong; Industrial Metals Hold Up
  • Dollar Trades within a Wide Range

U.S. Equities

After starting last week with a bearish a tone, which took it to price-based support that lines up with the rising 10-week moving average, the S&P 500 rebounded over the remainder of the week. The rally brought the index to a new weekly closing high. Near-term support remains around the May – June consolidation, near 4,250. Below that, the 40-week moving average lines up with the 3,900 – 4,000 level.

The 14-week RSI is once again in an overbought condition, indicating that there is momentum behind the move higher in price.

The S&P Small Cap 600 closed below the 10-week moving average for a third consecutive week but did hold support at the low end of the consolidation zone that has been playing out since March. The 40-week moving average continues to move higher and is now lining up with price-based support. The 14-week RSI is still making lower highs as momentum wanes, but the indicator remains in a bullish regime for now.

The bigger issue for Small Caps is the relative performance, which is moving lower after breaking support. As equities rebounded last week, investors favored the larger names within the market.

Within the Small Cap universe, four of the better performing sectors last week were:

  • Technology – remains in a consolidation.
  • Discretionary – holding support but trading sideways.
  • Health Care – in a consolidation.
  • Industrials – rolling over after a strong uptrend.

Early last week, the NASDAQ Composite Index tested and held price-based support that lined up with the rising 10-week moving average. By the time the closing bell rang on Friday, the index was at a record level, continuing to improve after breaking from a four-month consolidation. The 14-week RSI is near overbought levels but did not confirm last week’s high, a divergence that should be noted but has not been confirmed by a break down in price.

On a relative basis, the NASDAQ remains above support.

U.S. Fixed Income

The 10-Year Note began last week as a beneficiary of the “risk-off” sentiment in the equity market. The note broke above the key $134 resistance level that we had been highlighting, traded to the declining 40-week moving average, and then pulled back to test the breakout level. The result was a close above the rising 10-week moving average but below the 40-week moving average. The key question now is “will old resistance become new support”?

The 14-week RSI may provide a clue as it continues to move higher after breaking the downtrend that we highlighted last week.

Across the curve, there remains a downside bias to yields, with movement more pronounced at the long end.

Global Equities

Global stocks were not immune to the early selling pressure in the market last week but also participated in the rebound that took hold as the week progressed. The Global Dow Index closed below the 10-week moving average, which is beginning to turn lower, but remains above the rising trend line from the March 2020 lows. The 14-week RSI continues to hold bullish ranges.

As with the Small Caps, the bigger issue for global equities is on a relative basis where the group continues to lag the S&P 500.


The Bloomberg Commodity Index rebounded from support last week to retake the 10-week moving average and finish at a record weekly closing high.

The 14-week RSI is holding near overbought levels, keeping momentum with the bullish long-term price trend.

Drilling down on the commodity complex, Precious Metals remain under pressure while Industrial Metals remain resilient. Energy is attempting to rebound back toward recent highs. Agriculture continues to heal after a sharp move lower from the May highs.

The Dollar

The U.S. Dollar Index closed higher once again last week but remains in the middle of a wide trading range. At the same time, the 14-week RSI is also in the middle of the range.


The dips continue to be bought in the equity market, but outperformance continues to concentrate in the larger stocks, especially those with a “growth” bias. The path of least resistance remains to the downside for rates, but we see the 10-Year Note at a key support level as the new week begins. Commodities remain strong even as the Dollar Index moves higher in its trading range. 

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.