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Take-Aways:

The countertrend rally to 3,900 that we have been highlighting has played out. The S&P 500 closed at that level and above its 10-week moving average. It and the S&P 600 is now in neutral positions and must reclaim their 40-week moving average for the trends to become incrementally bullish. The NASDAQ 100 remains the underperformer in the U.S. space. Rates moved lower for the first time in 13 weeks, but the bears are still in control. Commodities sat out the week’s rally but are fighting hard at support.

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U.S. Equities

The S&P 500’s countertrend rally continues to play out, taking the index to the 3,900 level that we have been highlighting for the past few weeks. The index has regained the 10-week moving average but remains below the declining 40-week moving average. The trend is improving, but we need to see the 40-week moving average broken to the upside to become incrementally bullish from here. A move below 3,700 negates our current views.

The 14-week RSI has made a higher low recently but remains in a bearish regime.

The S&P Small Cap 600 Index also rallied during the week. The index is in a neutral position between the 10 and 40-week moving averages. Above 1,050, there is an upside bias that becomes incrementally bullish above 1,300. The 14-week RSI is moving higher but has work to do to break from a bearish regime. 

The relative trend remains on our radar for a possible breakout. A move above the October/November 2021 peaks would set the stage for further outperformance.

The NASDAQ 100 Index closed higher on the week after holding key support at 11,000. The index remains below the 10 and 40-week moving averages, and the 14-week RSI is holding in a bearish regime.

The relative trend continues to trade below resistance. Odds favor continued underperformance which is what the group gave investors last week.

U.S. Fixed Income

The 10-Year Note closed higher for the first time in 13 weeks (that’s one-quarter of trading). The Note remains below the declining 10 and 40-week moving averages. We are open to a countertrend rally, but the bears are still in control.

The yield remains above the 3.20% – 3.50% support zone. Nothing will change until support is broken to the downside.

Global Equities

The Global Dow closed higher on the week as it fights to hold support at the pre-COVID levels. The index is in a neutral position between the 10 and 40-week moving averages, while the 14-week RSI holds in a bearish regime.

The relative trend may be showing signs that a bottoming process is playing out. A break of the trend from March 2021 could set the stage for outperformance.

Commodities

The Bloomberg Commodity Index is holding key price-based support in the 106-110 zone. Breaking above the 10 and 40-week moving averages is an important next step to keep the secular bullish trend alive.

Momentum has also held a key level. The 14-week RSI is holding above 40, indicating that the bulls retain long-term momentum.

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