Stocks remain under pressure in the U.S., with the S&P 500 and the NASDAQ 100 closing lower for the seventh consecutive week. Our view remains that investors who must maintain an allocation to equities are playing a relative game, with the goal of focusing on what is least bad. Small Caps are beginning to take that role as their relative strength improved for a third consecutive week. Bonds remain under pressure (see our comments on AGG) despite the 10-Year Note holding a key support level. Finally, commodities continue to consolidate; Agriculture is taking the lead within the group.

U.S. Equities

The bears remain in the control of the trend for the S&P 500, which closed lower for the seventh consecutive week last week. This is only the fourth time since 1970 that the losing streak has equaled seven weeks. The last time was in 2001. The index is firmly below the declining 10 and 40-week moving averages, with the former nearing price-based resistance at the 4,200 level. Momentum confirms the bearish trend as the 14-week RSI has reached the 30 level.

The losing streak for the S&P Small Cap 600 now stands at five weeks after the index was turned away at resistance near 1,220. Small Caps are below the declining 10 and 40-week moving averages, and the 14-week RSI has reached the 30-mark. 

While the absolute trend leaves much to be desired, the relative trend has moved higher for the third week in a row. The ratio is poking its head above resistance as Small Caps have been the least bad pocket of the U.S. equity landscape. Please see our note from May 13th, where we highlight this dynamic in more detail.

The NASDAQ 100 has also logged a seventh consecutive week of losses. The index is below the 10 and 40-week moving averages, with the former in the resistance zone between 13,000 and 14,000. The bears are still in control of this former market leader.

The NASDAQ 100 continues to underperform the S&P 500, and the ratio is in a steady downtrend below resistance.

U.S. Fixed Income

The 10-Year Treasury Note continues its healing process, registering a second strong week in a row after holding support at the 2018 low. The Note is now set to do battle with the declining 10-week moving average, which remains well below the 40-week moving average.

The yield has established resistance at the 3.20% level for now.

Across the Treasury curve, rates have moved into consolidation patterns after strong runs to the upside. How these consolidations resolve could be extremely important for the performance of risk assets for the remainder of the year. We are watching closely.

While the 10-Year Note has found support at a key level, the iShares Core U.S. Aggregate Bond ETF (AGG) has fallen below one. The $104 mark has been important support and resistance since 2008. The fund is currently below that mark and the 10 and 40-week moving averages. Momentum confirms the bearish trend, with the 14-week RSI becoming deeply oversold.

Global Equities

The Global Dow is holding below broken support at the 3,800 level as it remains below the 10 and 40-week moving averages. The 14-week RSI has moved into a bearish regime, breaking below the 40-level, and has room for an oversold condition. 

The relative trend remains below resistance but saw a solid improvement last week. The ratio is now threatening a breakout. This is a development that should be watched closely in the weeks ahead as Global stocks could be able to take a leadership role.

Commodities

The Bloomberg Commodity Index remains in an uptrend, above the rising 10 and 40-week moving averages. The 10-week moving average acted as support again last week as the index remains in a consolidation after a strong run to start 2022.

The 14-week RSI is near overbought levels, confirming the bullish price action.

Precious Metals remain under pressure and in a sloppy consolidation after failing to hold their breakout in April. Industrial Metals remain below the rising trend line. Agriculture has scored a breakout and is the strongest trend in the space currently. Energy is consolidating, but recent higher lows point to a bullish bias.

U.S. Dollar

The greenback remained in a bullish trend despite the pullback last week. This weakness is likely a response to becoming overbought in the near term, and the 14-week RSI is still above 70. Support at the 103 level is the key line in the sand for the bulls to defend.

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.