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.

Time frames matter. Stocks and commodities did all they could last week to maintain their prevailing long-term trends.

The commodity market is conflicted with the Lumber/Gold ratio powering higher while Copper/Gold spins its wheels.

The silver lining that we highlighted in last week’s note played out as washed-out short-term breadth metrics led to a stock rally.

The NASDAQ 100 continues to be the best of the bunch, and we find the action in the S&P 500 impressive.

It is interesting to note that during a positive session for the S&P 500 yesterday, three defensive groups traded to 21-day relative highs.

Short and intermediate-term trends have come under pressure while longer-term trends remain mostly bullish.

We would like to see Growth over Value and Large over Small confirmed with a breakdown in the Copper/Gold Ratio.

There is no way to sugarcoat how bad breadth has become across U.S. markets. Many metrics are at or near lowest levels of the year.

It would not be a surprise to see equities react to overly bearish sentiment and a lower high in the VIX by staging a near-term rally.

A flattening yield curve is likely to be supportive of further outperformance on the part of Technology and Discretionary.

Markets came under pressure last week on the heels of the build in new lows that we highlighted.

The key themes and relationships that we track are beginning to point to decreasing risk appetite on the part of investors.

Our “pause that refreshes” continues to play out for equities as the trend and momentum remains bullish across markets.

There was a lot of talk about Growth lagging Value yesterday but putting it into perspective shows us that Growth remains the leader.

While we have not changed our stance, we are mindful of the elephant in the room in the form of increasing new lows.

The ratio that we are watching most closely is Copper/Gold. It has been consolidating for most of the year

As the S&P 500 continues to work through its short-term consolidation, breadth metrics have weakened across markets.

The trend for the S&P 500 remains bullish, above the rising 50 and 100-day moving averages. Sentiment is still more greedy than fearful.

Most sectors continue to trade at/near record highs. That is the sign of a fairly healthy market.

Despite some stalling activity across equity markets last week, we remain in the camp of higher prices into the end of the year.

The continued weakness in the Copper/Gold and Lumber/Gold ratios are the biggest standouts as Gold wakes up.

As stocks pause after a strong rally, breadth metrics remain supportive of our view that equity prices will melt up.

It would not be surprising to see a near-term pause that allows the indexes to refresh before moving higher into the end of the year.

Eight of eleven sectors are trading at/near record highs. This lends a bullish confirmation to the uptrends.

We find it hard to be bearish on equities when the S&P 500, NASDAQ Composite, and S&P 600 are trading at record levels.

This week’s key developments are the breakouts in the Growth vs. Value ratio and Semiconductors vs. the S&P 500.

Advance/Decline Lines are either at new highs or breaking short-term resistance.

The breakout in Small Caps to join the S&P 500 and NASDAQ 100 at record levels adds fuel to the bullish trend for equities.

The S&P 500, NASDAQ Composite, and Russell 2000, are trading at all-time highs.

A flattening yield curve and dollar strength should help to keep bullish sentiment in check in the near term.

There are key levels being tested for some of these important themes that we track. How they respond to these levels…

Until there are signs that breadth metrics are breaking, we stick with the view we had for the past few weeks, breadth is improving.

New highs for the S&P 500 and the NASDAQ 100 line up well with our view that U.S. stocks are likely to see a melt up into year’s end.

The odds are beginning to point to a melt-up for the equity market into the end of the year.

New high for the S&P 500 is bullish in the U.S.; we expect to see the Small Caps and the NASDAQ Composite follow suite.

Key themes point to a “risk-on” environment that leans toward larger stocks and is in the direction of value.

For most of the year, the bear case has hinged on declining breadth. It is safe to say that that thesis has been wrong.

Bears had a golden opportunity to push stocks lower, but the S&P 500 and the NASDAQ 100 have staged rebounds.

Technology and Discretionary have shown signs of improvement over the past week as equity market strength broadens.

Commodities remain a clear leader across asset classes, with Energy and Industrial Metals driving performance.

The S&P 500’s powerful move to the upside goes a long way in repairing the minor damage that has been done to the index.

For a second consecutive week, breadth metrics have improved for the most part. Small Caps show the broadest improvement.

After a rally attempt last week, the S&P 500 and NASDAQ 100 have pulled back below their 100-day moving averages.

Energy and Financials remain the best of the bunch, and there has been some relative improvement for…

Choppy trading in the equity market is likely to persist with many of the major averages stuck between moving averages.

Last week, we noted that these themes were a sloppy mess, and we are hard-pressed to say that much has changed this week.

Breadth continues to become “less bad,” especially for the NYSE’s metrics which are beginning to flash bullish divergences.

Both the S&P 500 and the NASDAQ 100 have been logging lower highs and lower lows over the past month.

Cyclical parts of the market have shown relative improvement, Energy and Financials are moving into leadership positions.

As rates continue rising, Small Caps are likely to remain leadership along with Commodities.

The failed breakout in Discretionary vs. Staples is another example of the “risk-on” theme not getting much traction.

Recent weakness in the market has not done much to improve. Small Cap breadth has become “less bad”.

We must wonder if “sell the rip” is a better plan than “buy the dip,” …at least in the near term.

Rising rates are beginning to impact the equity market, with strength surfacing in the Financial sector.

The breakdown in the 10-Year Note (move higher in rates) is arguably the key development over the past week.

Lumber is leading Gold and Discretionary is breaking out relative to Staples, two key data points in the “risk-on” thesis.

If your job is to “write” about technical analysis, you typically find data points that fit your narrative.

Fears of “contagion” are running through the media but thus far are not materializing in the markets.

Defensive groups have shown some signs of relative stabilization, as we would expect in times of stress.

Near-term pressure in the equity market persists, sending the major averages to important levels of interest within their prevailing trends.

Signs of life in risk appetite as High Beta begins to lead Low Volatility, and Lumber makes a strong move higher relative to Gold.

Small Caps remains the weakest and the metrics have ticked lower over the past week.

The S&P 500 has once again reached the 50-day moving average, which has been a key guidepost for the “buy the dip” crowd.

The Health Care sector is on the verge of trading to another new high as the uptrend is firmly in place on an absolute basis.

Odds favor the rising 10-week (50-day) moving average continuing to act as support to pullbacks in what remains a bullish trend.

From a risk perspective, the fact that these trends did not breakdown in the face of a four-day decline for the S&P 500 is encouraging.

Short and intermediate-term trend measures remain in early uptrends, while long-term trend metrics continue to decline.

The S&P 500 and NASDAQ 100 are in steady bullish trends while Small Caps and Commodities are stuck in their consolidations.

The Health Care sector is on the verge of trading to another new high as the uptrend is firmly in place on an absolute basis.

Technology, Discretionary vs. Staples, Lumber/Gold, Small Caps, Growth Over Value are top of mind as autumn approaches.