Key Points

  • S&P 500 and NASDAQ Composite Remain Near Record Levels
  • Small Caps are Stuck in a Consolidation
  • Global Stocks Can’t Get Relative Traction
  • Yields Move Higher Following the July Jobs Report
  • Commodities Come Under Pressure, Gold Down Overnight

U.S. Equities

The S&P 500 closed at a record weekly high on Friday as the steady grind to the upside continues. The 10-week moving average remains the best guide for the current trend. Near-term support is at the 4,250 level, while longer-term support is in the vicinity of the rising 40-week moving average, near 4,000.

The 14-week RSI has moved into an overbought position once again, signaling that there is still momentum behind the price trend.

The S&P Small Cap 600 Index continues its rebound attempt from the support zone which now holds the rising 40-week moving average. The index remains below the flat 10-week moving average which acted as resistance last week. Thus far, the 14-week RSI has remained in a bullish regime as the recent low has not broken below the 40 level.

On a relative basis, Small Caps continue to trade below broken support (now resistance?). At the same time, the ratio has made a series of lower highs and lower lows, keeping it in a downtrend in the near-term.

Within the Small Cap universe, the top four performers on the week were:

  • Financials – working higher after holding support.
  • Telecommunication Services – trading in a choppy consolidation.
  • Utilities – extending to the upside after breaking resistance.
  • Technology – pushing toward the top of the 2021 trading range after making a higher low.

The Nasdaq Composite closed the week within 2 points of a record high (on a weekly closing basis) as it holds above the rising 10-week moving average and near-term support. The 14-week RSI remains in a bullish regime, just shy of overbought levels. However, the divergence that we have been highlighting also remains in place.

On a relative basis, the NASDAQ continues to stall. The ratio does remain above the support level that we have been highlighting, keeping the benefit of the doubt in favor of outperformance for now.

U.S. Fixed Income

The 10-Year Note closed lower last week after a rally attempt was, once again, unable to hold above the declining 40-week moving average.  The better-than-expected July non-farm payrolls report is the likely rational for weakness late in the week. Thus far, the Note is holding above support at the $134 level and the rising 10-week moving average.

The 14-week RSI has begun to turn lower after failing to exit a bearish regime.

Across the Treasury curve, last week brought a bit of volatility at the front-end after the July non-farm payrolls report on Friday. The two-year yield saw a sharp rebound as did the five-year. Further out, the move higher in rates was less dramatic but we are seeing signs of stabilization in the downtrends that have been in place since March.

Global Equities

The Global Dow closed last week above the 10-week moving average and near the top of the weekly range. The uptrend from the March 2020 low remains in place and the 14-week RSI is holding in a bullish regime.

Relative to the S&P 500, the trend in global equities remains challenged. The ratio is below resistance despite a rebound last week. Until this resistance level is overcome, it is hard to make the case that global stocks should be favored over domestic.


The Bloomberg Commodity Index came under pressure last week. This could be an important “tell” in the near-term as the better-than-expected jobs report on Friday could be interpreted as a positive for economic growth. The fact that commodities did not respond positively to this news points to the fact that the uptrend from the March 2020 low may be due for a pause. Thus far, the rising 10-week moving average is holding as support. Price also remains above the 2018 highs, a key zone of support. The 14-week RSI is in bullish ranges but has failed confirm recent price highs. This divergence may become meaningful should price support break.

On a relative basis, Commodities are building a base vs. the S&P 500 but have yet to achieve a clear breakout.

Within the commodity complex, Industrial Metals and Energy were unable to produce new breakouts last week. Precious Metals have come under renewed pressure, and we note that Gold traded lower overnight. Agricultural commodities are stuck in a range after a rebound from recent lows.

The Dollar

The U.S. Dollar Index staged a rebound last week, but it was not enough to break above near-term resistance. The index remains in a choppy consolidation. At the same time, the 14-week RSI has not been able to exit bearish ranges and is in the middle of the range.


Prevailing equity trends remain in place with the S&P 500 and the NASDAQ Composite Index trading at or near record levels, while Small Caps continue to consolidate. Friday’s non-farm payrolls report was met with some confusion in the market. Rates moved higher following the report, which is to be expected, but commodities came under pressure. This is another sign of the turbulence that we have been noting under the surface of asset markets. For now, we stick with a mostly bullish view on the equity market and favor the U.S. over the rest of the world as Global stocks remain relative laggards.

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.