Key Points
- S&P 500 Tests Key Support
- Small Caps Break Down
- NASDAQ 100 Finds Its Major Support Level
- The 10-Year Note Remains in a Bearish Trend
- Commodities Consolidate in a Bullish Position
Mid-Week Market Update – United States
The S&P 500 has made a steep decline after being rejected at the declining 100-day moving average and is now below the 50-day moving average once again. The index is testing support at 4,200, a key level for the bulls to defend. The bias remains to the downside below the moving averages.
The 14-day RSI is trending lower, on the verge of reaching oversold levels.
The S&P Small Cap 600 Index has given up 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 moving toward oversold levels after breaking the rising trend line.
The relative trend is bearish, with the ratio below the 50-day moving average and price-based resistance.
The NASDAQ 100 has moved to 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 as it moves toward oversold levels.
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. Despite a near-term rally, the bears remain in control of the trend. The 14-day RSI is holding in a bearish regime, lending momentum confirmation to the price trend.
The Bloomberg Commodity Index was once again turned away at the 140 level and has broken near-term support at 130. Current action can best be described as consolidation within an uptrend as the index trades above the rising 50 and 100-day moving averages. The 14-day RSI is holding in a bullish regime. The divergence that we called out last week will become a factor if 120 is broken to the downside.
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 exploded to the upside, moving above 30 and the 10-day moving average. The trend has been rising since the VIX bottomed in July. Spikes over 30 and the moving average are usually short-lived.
Simultaneously, the VIX curve has inverted once again. This signals a high level of fear in the market and can be used as a sign that a near-term low may be close.
Take-Aways:
The S&P 500 and the NASDAQ 100 have traded to key support levels, while the S&P 600 has broken below. These dynamics play out as the VIX is signaling extreme levels of fear in the market. While the bias remains to the downside for equities, it would not be a surprise to see a near-term rally. Away from equities, Commodities are consolidating in a bullish trend, and Treasuries remain under pressure.
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.