Rallies are
Being Sold

by | May 9, 2022

Key Points

  • The S&P 500 Can’t Hold Rallies Below the Moving Averages
  • Small Caps Could See Support Give Way
  • The NASDAQ 100 Remains an Underperformer
  • Ten Year Note Continues to Cascade
  • Commodities Maintain Their Bullish Trend

U.S. Equities

The S&P 500 remains below broken support at the 4,200 level, unable to hold above it during rally attempts last week. The index is below the declining 10 and 40-week moving averages as the bears are in control of the trend. The 14-week RSI is holding below the 40 level, lending momentum confirmation to the bearish price action.

The S&P Small Cap 600 closed on support again last week as it remains below the 10 and 40-week moving averages. The 14-week RSI is below 40 and trades in a bearish trend.

The relative trend is bearish below resistance.

The NASDAQ 100 once again closed the week below the 10 and 40-week moving averages and is breaking the lower bound of the 13,000 – 14,000 support zone. The 14-week RSI is shifting to a bearish regime, confirming the price trend for the index.

On a relative basis, it was another week of underperformance as the ratio moved further below the resistance level.

U.S. Fixed Income

The 10-Year Treasury Note resumed its cascading downtrend last week, trading below the declining 10 and 40-week moving averages. Perhaps the Note can begin to heal as it finds the 2011 and 2018 lows, but the trend is guilty until proven innocent.

The yield continues to move to the upside, breaking the 3% level that we have been calling out.

Global Equities

Selling pressure is not isolated to U.S. equities. The Global Dow is in the process of breaking support as it trades below the 10 and 40-week moving averages. Below 3,800 the odds of seeing the index test the pre-COVID highs are increased. Momentum is bearish, with the index 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. The 140 level remains a key test for the bulls.

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

Take-Aways

Stocks in the U.S. and globally remain under pressure and in a defensive posture as rallies are being sold below declining moving averages. Unfortunately, Treasuries are still not providing a port in the storm as prices continue to cascade to the downside. Commodities remain the most bullish trend in the market.

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.