Key Points

  • The S&P 500 Starts 2022 at Record Levels in a Bullish Trend
  • Small Caps and the NASDAQ Are Relative Laggards
  • The Fed’s Footprint Is Seen at the Front of the Curve
  • Commodity Bulls Are Fighting Hard, We Need to See More
  • The Dollar Rally Faces a Key Test as the New Year Begins

U.S. Equities

On a closing basis, the S&P 500 finished the year at an all-time high. The weekly chart paints a picture of a bullish trend, with the index above the rising 10 and 40-week moving averages. The top of the small consolidation zone that began on November 5th, near 4,700, is now short-term support. More important support remains near the 4,550 level. Bullish above these levels.

The 14-week RSI continues to trade in a bullish regime. There is a small divergence in place as the indicator did not make a new high with the index. However, this is simply something that we are observing unless/until price begins to break important support levels.

The S&P Small Cap 600 closed to the year within in the consolidation that was in place for the majority of 2021. The index is below resistance as it wrestles with the 10-week moving average, slightly above the 40-week moving average. Both moving averages are flat, paining a fitting picture of what the trend in Small Caps has been like. The 14-week RSI adds a confirming data point as it trades in the middle of the range.

On a relative basis, Small Caps are in consolidation, below resistance. It is hard to get excited about the group until this resistance level is overcome.

The NASDAQ Composite Index closed the week on the lows of the weekly range but managed to hold above the rising 10-week moving average which is above the rising 40-week moving average. The index remains in an uptrend. However, we find it hard to become overly aggressive in adding to a bullish view until new highs are reached, with the 14-week RSI now trading in the middle of the range.

Additionally, on a relative basis, the NASDAQ Composite is beginning to fade from resistance. A break of support would turn this relative trend in favor of the bears.


U.S. Fixed Income

The 10-Year Note (price) finished the year below the 10 and 40-week moving averages as it desperately tries to hold support at the $130 level. It is interesting to note that with all the talk of the Fed’s taper and the increased odds of a rate hike next year, the price has not moved much. The 14-week RSI is making higher lows, in fact, hinting at the potential for a move to the upside in price. However, we are not going to warm to that view until the moving averages are surpassed.

Note that the yield has strong resistance near 1.75%. It will take a lot of work to breach that level.

Global Equities

The Global Dow closed the year by threatening to break to new highs as it trades above the flat 10 and 40-week moving averages. While new highs are bullish, we note that should they be reached, there will be a lack of confirmation as the RSI remains stuck in the middle of the range.

From an allocation perspective, it is hard to favor Global over the U.S., with the relative ratio mired in a multi-year downtrend and trading near the lows of the past three years.


The Bloomberg Commodity Index is fighting hard to maintain a bullish position, but last week’s failure at the declining 10-week moving average is a reminder that the commodity bears are fighting just as hard. For now, the bulls have a slight edge as the rising 40-week moving averages have served as support. At the same time, the 14-week RSI remains in a bullish regime.

Relative to the S&P 500, Commodities are holding their lows, trading in consolidation. However, we want to see the ratio break resistance before we can make a case for outperformance.

The Dollar

The U.S. Dollar remains above the 94.50 breakout level but is pulling back to the test the rising 10-week moving average. Above these two key levels, the bulls are in control. However, we have to wonder how much upside there could be as the index begins to test the late 2019 consolidation zone. The 14-week RSI is leaving overbought levels but continues to point to the bullish momentum for the greenback.

Holding support will likely add to the bearish pressure on commodities as a group.


The new year begins with the old trends in place. The S&P 500 continues to reward the “broad exposure of buy & hold crowd.” Small Caps and the NASDAQ are underperforming, making it hard to become aggressive with overweight positions in those groups. Commodity bulls face a hard fight, and we want to see them retake control before becoming more aggressive. Perhaps the dollar holds the key to commodities? Watch that 10-week moving average test for the greenback.

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.