The losing streaks for U.S. and global equity markets continue to expand, and it is hard to make a compelling case for the asset class until there is evidence that selling pressure is abating or that there has been a capitulation. Treasuries are trying to find a bottom, but there is still a lot of work to do. Commodities are still the best trend, but last week showed the importance of our new view of becoming more selective within the space. Finally, the U.S. Dollar remains a haven and now has room to its 2001/2002 highs.

U.S. Equities

The S&P 500 closed lower for a sixth consecutive week despite a valiant rally attempt on Friday. The index is below resistance at 4,200 and the declining 10 and 40-week moving averages. The 14-week RSI is moving lower with room to an oversold position as it trades below the 40 level. It is hard to make the case that the bears are not in control of the trend.

There have been 15 prior instances since 1950 when the S&P 500’s losing streak has equaled six weeks. Over the following three months of trading (63 days), the index has been higher 60% of the time. The mean return has been -0.50%. The median return has been 0.59%.

The losing streak for the S&P Small Cap 600 stands at four weeks. The index is below resistance at 1,220 and the declining 10 and 40-week moving averages. Momentum is bearish, with the 14-week RSI below 40 and moving toward oversold levels.

The relative trend has been holding steady for the past two weeks. In the current market, Small Caps have been less bad.

There is a six-week streak of losses in place for the NASDAQ 100, and the index has cleanly broken support at 13,000. Price is below the declining 10 and 40-week moving averages, putting the bears in control of the trend. Momentum is confirming the bearish price action with the 14-week RSI below 40.

The NASDAQ 100 continues to underperform the S&P 500.

There have been eight prior instances since 1985 when the NASDAQ 100’s losing streak has equaled six weeks. Over the following three months of trading (63 days), the index has been higher 25% of the time. The mean return has been -5.04%. The median return has been -2.37%. Note that there were two large losses in 2008. Overall, the sample size is very small.

U.S. Fixed Income

The 10-Year Treasury Note did begin to “heal” near the 2011 and 2018 lows last week, something we called out as possible in this note last week. However, the Note is still below the declining 10 and 40-week moving averages and will require time before the bullish case can be made.

The yield has begun to establish 3.20% as a resistance level.

Rates eased across the curve last week, but uptrends are still the name of the game.

Global Equities

The Global Dow has also broken key support below the declining 10 and 40-week moving averages. The index has been lower for six consecutive weeks. Momentum confirms the bearish price trend as the 14-week RSI trades below 40.

The relative trend remains below resistance in a choppy consolidation that has marked trading for more than a year.

Commodities

The Bloomberg Commodity Index remains in an uptrend, above the rising 10 and 40-week moving averages. However, we note that the index needed a late-week rally to hold the shorter moving average after its first trip below it in 2022. The 140 level remains a key test for the bulls.

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

Our view that it may be time to become more selective in the commodity complex is proving to be the right one. Precious Metals remain under pressure and continue to confound the narrative-focused bulls who believe that PMs “should” be an inflation hedge. Industrial Metals continue to move lower after breaking below the rising trend line. Agriculture is on the verge of a breakout. Energy is consolidating, but recent higher lows point to a bullish bias.

In another narrative busting story, the U.S. Dollar Index continues to work higher, taking out resistance near $103. Above this level, the 2001/2002 highs are in play. Momentum confirms the trend as the 14-week RSI is overbought.

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