At the risk of sounding like a broken record, “less bad” continues to be the focus for investors who must maintain an allocation to U.S. equities.

The bears remain in the control of the trend for the S&P 500, which closed lower for a seventh consecutive week last week.

Equities have staged a sharp four-day relief rally, a good starting point to arresting the decline that has gripped markets for much of 2022.

Except for Energy, there are few compelling absolute trends in the market. Some groups are trying to stage rebounds from logical support levels.

Equities remain under pressure, with the S&P 500 and NASDAQ 100 notching six-week losing streaks.

With the S&P 500 under pressure for a sixth consecutive week, is it not surprising to see the risk-off trends continue to play out.

The only good thing that we can say about the breadth picture is that we have nothing good to say about the breadth picture.

With stocks under pressure, sentiment has reached levels of excess fear.

The growth areas of the market remain under pressure on an absolute and relative basis.

Stocks in the U.S. and globally remain under pressure and in a defensive posture as rallies are being sold below declining moving averages.

The message from the themes that we track continues to be one of risk aversion on the part of investors.

There was some improvement in the breadth metrics, rebounding slightly from the depressed levels that were seen in the previous week.

Bearish sentiment has moderated a bit over the past week as the S&P 500 and the NASDAQ 100 continue to test important areas of support.

Over the past week, we have learned that in a bear market, even the defensive sectors eventually come under attack.

Key support levels are being tested or broken for equities around the world. Commodities remained the leading asset class and closed higher.

Risk ratios continue to send the same message of investors’ unwillingness to take risk within the markets.

Market volatility has taken its toll on market breadth over the past week, as readings have declined broadly.

The S&P 500 and the NASDAQ 100 have traded to key support levels, while the S&P 600 has broken below.

Investors who must maintain an allocation to U.S. equities are now likely playing a relative game, finding pockets of the market which are less bad.

Equities remain offered while treasuries fail to provide much cover. Commodities retain their bullish trend but were not spared last week.

Themes and relationships that we track in this note have continued to send the message that there is a lack of risk appetite.

There were improvements in the breadth metrics for the NYSE, S&P 500, and S&P 600. Metrics have declined over the past week.

Equities are fighting hard just to maintain their neutral trends and avoid breaking important support levels.

The groups that are in clear bullish trends (Energy, Staples, and Utilities) are few and far between. Growth sectors continue to lag.

Commodities have begun to resume their uptrend, putting an important resistance level in their sights.

After snapping a three-week streak of improvements last week, the most recent breadth data is mixed to slightly lower.

Commodities remain the most bullish trend across asset classes and may be on the verge of a continuation.

The defensive pockets of the S&P 500 continue to garner the most attention, with many breaking to a new high on an absolute and/or a relative basis.

Stocks came under pressure last week, unable to maintain strength from the March lows. The rally is beginning to look more and more like a bear market bounce.

Many of the themes that we track continue to point to a market where investors are unwilling to take on excess risk.

While most of the metrics have weakened, the declines are most pronounced in the short-term data and in the Small Cap index.

Commodities remain in a bullish trend and are likely still under-owned. These dynamics play out while sentiment is in a neutral position.

The growth sectors of the S&P 500 continue to improve, especially Technology and Consumer Discretionary.

After a strong move over the past two-three weeks, the U.S. and global equities are showing signs of indecision.

After showing some improvement in the prior two weeks, the themes that we track to gauge risk appetite in the market have begun to stall.

As we enter the final trading day of the first quarter, breadth metrics continue to improve across major U.S. markets.

Bulls want to see the S&P 500 hold above 4,550 to have confidence that this is more than a rally within a bear market.

Technology and Discretionary are leading a possible resurgence in the “growth” themes under the surface of the S&P 500.

Small Caps were a disappointment and have given up some of the relative strength that they fought so hard to gain in the prior month.

The positioning of the themes and relationships that we track is decidedly neutral (except for Discretionary/Staples).

Breadth data improved for a second consecutive week, except for the Small Cap metrics. We are most impressed by the advances in the NASDAQ 100.

The countertrend rally that we highlighted for equities last week has taken the U.S. averages into neutral positions.

The growth sectors of the market have staged impressive rebounds, but trends remain mostly bearish until key moving averages are retaken.

Last week’s rally in equities served to improve their positioning from one where the bears were on the verge of taking control to one that is more neutral.

Most of the themes and relationships that we track to gauge risk appetite have staged rallies along with risk assets this week.

A persistent theme this year has been an inability to build on these improvements when they have taken place.

Equity indexes in the U.S. are in a position to embark on countertrend rallies, something that we began to explore last week.

For the second week in a row, “less bad is good enough” for investors who must maintain an allocation to equities and are playing the “relative” game.

Momentum is beginning to shift in favor of the bears, which would lend confirmation to any support breaks that play out in the weeks ahead.

The trends for the key themes that we track remain largely tilted toward less risk-taking on the part of investors.

Since the start of the year, improvements in breadth have been short-lived. This week is another case of the metrics moving lower after the previous week’s improvement.

Small Caps continue to outperform and have yet to break down on a relative basis. Commodities mark a big reversal day.

For investors who must maintain an allocation to equities, there are only two sectors that have strong absolute trends (Energy and Utilities).

The more interesting story is under the surface in the U.S., where Small Caps are exhibiting better relative strength.

The move higher in the Lumber/Gold Ratio and the Small Caps vs. Large Caps Ratio point to some increased risk appetite on the part of investors.

We have seen bouts of improvement at various points over the past few months, but they have proven to be short-lived.

The major averages in the U.S. are doing all that they can to hold important support levels. Sentiment has become more fearful.

Energy remains the best trend in the market. There are only four sectors that are trading above their respective 200-day moving averages.

While there has been no lack of geopolitical events with the potential to move markets, the major U.S. averages all managed to hold key support levels.

Growth vs. Value and Discretionary vs. Staples have both flashed a bullish RSI divergence at recent price lows.

Breadth metrics have weakened across the board as equities have come under pressure this week.

S&P 500 and NASDAQ 100 have traded down to important support levels while their 14-day RSIs have made a small bullish divergence.

Defensive groups held up on a relative basis last week, but this simply meant less bad as equities were under pressure broadly.

Generally speaking, the message of the market remains murky based on the themes that we cover here.

Broadly speaking, the breadth picture remains less than impressive across the major U.S. markets.

For all the news surrounding the Fed and Russia, there was no change to the trends for major assets that we cover.

Defensive groups have failed to take advantage of increased volatility, arguably a datapoint that favors the bulls.

Stocks came under pressure, keeping the major averages in neutral positions between clearly defined support and resistance levels.

Commodity themes are taking the Fed at face value, moving to the upside along with rates.

Breadth metrics have improved over the past two weeks, with the greatest improvement being seen in the S&P 500 data.

It would be encouraging to see resistance broken to the upside along with improvements in momentum to increase confidence.

With few exceptions, the word that best describes the absolute trends at the sector level is “sloppy.”

Stocks in the U.S. remain in repair mode, trying to fix the damage that has been inflicted on them since the start of the year.

The very subtle signs of life that we noted last week remain in place but have done little to gain much traction.

The broader and/or smaller the index, the more damage that has been done under the surface of the index.

Stocks in the U.S. have moved higher over the past three days, we note that there is much work to do for the bulls to reclaim control.

When selling pressure grips in the market, it is often helpful to identify the sectors that held up the best on a relative basis.

Equities in the U.S. staged a late rebound on Friday, which held the S&P 500 while avoiding a fourth consecutive week of losses.

Lumber/Gold ratio has finally begun to succumb to the pressures that have been evident across the other themes that we track.

Some metrics are at/near “washed out” levels that have the potential to lead to a near-term bounce.

If the bulls are going to mount a rally attempt, there are clear lines in the sand from which a counterattack can begin.

Uptrends are hard to find (only Energy and Staples), neutral trends on an absolute basis led to outperformance on a relative basis.

Equities in the U.S. have begun to break key support levels shifting the burden of proof to the bulls.

The signs point to a lack of risk appetite on the part of investors this week. High Beta continues to struggle vs. Low Volatility.

While we have highlighted the poor breadth dynamics, we have been encouraged by a decline in new lows on the NYSE.

We note that the bulls are losing position and will have to fight hard to regain it. Commodities remain strong.

On an absolute basis, there are a lot of key support levels being tested as the new week begins. Trends are becoming sloppy.

The bearish development in the Growth vs. Value theme became clearer.

While I wish there was something compelling to say about the market breadth this week, there just isn’t.

Battle lines are being drawn across the asset classes that we highlight in this Note, with key levels being tested and/or breached.

The growth sectors of the S&P 500 all fended off a strong bearish attack yesterday to close near the highs of the range.

U.S. equities remain in bullish trends, but the pressure is mounting. Perhaps there will be a shift outside the U.S.?

The biggest change in the first week of the new year is the breakdown in the Growth vs Value theme.

Breadth declined after weakness across the board yesterday. However, the metrics held up better than we would have expected.

The biggest developments in the opening days of 2022 are the improvements in the Small Caps and Commodities.

The defensive sectors start the year by pulling back from record highs but remain in bullish trends above key support levels.

The new year begins with the old trends in place. The S&P 500 continues to reward the “broad exposure of buy & hold crowd.”

Investors move into the final day of the year in a defensive posture despite the S&P 500 trading near record levels.

The “bad breadth” thesis continues to erode for the bears as metrics improve across the board.

Within the U.S. equity markets, the bulls retain the benefit of the doubt, but the best bet appears to be centered on the S&P 500.

Technology and Defensive sectors lead the charge on the heels of the clean bullish setups that we highlighted.

Last week, risk assets largely improved across the board, though we note several market areas are currently testing resistance levels.

Breadth metrics saw a small improvement across markets this week, with the best results coming from short-term metrics.

Asset markets are searching for direction, with many trading in consolidations, unable to find a higher gear.

The sectors of the S&P 500 that should do well in an inflation regime appear to have peaked for now.

Short-term trading remains volatile, with a tilt toward “risk-off” across the U.S. equity landscape, timeframes matter.

The case can be made that investors have shifted to more of a risk-off stance despite the S&P 500 trading near record levels.

The NYSE’s Advance/Decline Line is fighting hard to hold support as the index is knocking on the door of new highs.

Equity Index bulls in the NASDAQ 100 and S&P 500 retain the benefit of the doubt for now, but the lines in the sand are clear.

The S&P 500 is trading near record levels, but the “defensive” sectors have been exhibiting the most strength of late.