Key Points

  • Equities Buck Early Pressure, Close at the Top of their Weekly Ranges
  • 10-Year Note Breaks Down, Rates Move Higher Across the Curve
  • Commodities Remain Strong, Energy Breaks Out
  • Dollar Index Holds Above a Key Level
  • Small Caps are the Group to Watch This Week

The S&P 500 rebounded from last Monday’s move to the downside, through the 10-week moving average, to close near the top of the weekly range. This bullish rebound has brought the index back to the 10-week moving average and kept it above short-term support at the 4,200 level. The rising 40-week moving average is not a factor now. For now, dip buyers continue to be rewarded, and the trend remains to the upside.

The 14-week RSI continues to trade in a bullish regime, indicating that the S&P 500 has not lost much upside momentum. We remain of the view that the index will continue to move higher and ultimately trade to new highs.

The S&P Small Cap 600 also staged a rebound from early selling pressure last week that pushed the index to price-based support. When all was said and done, the weekly close was between the 10 and 40-week moving averages, and Small Caps remained in the range that has marked trading since March. The 14-week RSI remains in a near-term downtrend but is beginning to stabilize within a bullish regime, a sign that momentum may be shifting in favor of the bulls.

On a relative basis, Small Caps are also beginning to stabilize between support and resistance. 

At the sector level, all but two groups were higher on the week:

  • Energy – a leader for a second consecutive week after holding support.
  • Telecommunication Services – eyes for the highs as support continues to hold.
  • Utilities – near the bottom of the list again, breaking support.
  • Health Care – stuck in a choppy consolidation.

The NASDAQ Composite Index closed near the top of the weekly range and above the rising 10-week moving average after a brief trip below. The index remains in an uptrend, above near-term support at 14,000. More important support at the 13,000 level is not in play for now. The 14-week RSI is in bullish regime, keeping momentum with the bulls for now.

On a relative basis, the NASDAQ was an underperformer on the week. The ratio is above important relative support, but there are signs that upside traction may be slipping.

U.S. Fixed Income

The 10-Year Note came under pressure last week after failing at the 10 and 40-week moving averages in the prior week. The Note closed at the low end of the weekly range, sending yields to the upside and below the rising trend line from the March lows. The 14-week RSI has rolled over after failing to break from bearish ranges, keeping momentum to the downside.

Weakness for the 10-Year Note, leading to higher rates, is a key development for asset markets as it increases the odds that cyclical/value areas of the equity market may be able to regain leadership. At the same time, higher rates may be seen as a tailwind for Small Caps.

Rates have moved higher across the curve over the past week. The moves at the front-end have pushed two and five-year yields toward the highs from earlier this year. The back end has been more muted. The key point is that rates have an upside bias in the near-term.

Global Equities

The Global Dow’s rebound over the course of last week, and close near the top of the weekly range, took the index back to the underside of the broken 10-week moving average and the rising trend line from the March 2020 lows. The index remains in a consolidation, but the 14-week RSI is holding within a bullish regime.

On a relative basis, the Global Dow remains below resistance but continues to stabilize in the near-term. A break of resistance would be a reason to become more constructive in equities outside the U.S.


Bloomberg Commodity Index rebounded from the rising 10-week moving average to close the week at the top of its range. Broadly speaking, commodities remain in an uptrend confirmed by momentum as the 14-week RSI moves higher within a bullish regime.

The relative trend is on the verge of a breakout, setting the stage for outperformance by commodities vs. the S&P 500.

Within the commodity complex, “risk-on” assets continue to move higher while defensive assets remain under pressure:

  • Precious Metals – near-term trend is bearish.
  • Industrial Metals – holding near the recent highs.
  • Agriculture – stuck in their consolidation.
  • Energy – new highs after holding support.

The Dollar

The U.S. Dollar Index closed above the key 93 level for a second consecutive week as it holds above the rising 10-week moving average. Above 93, odds favor further strength for the greenback. Since July, the 14-week RSI has made a series of higher lows as it attempts to shift to a bullish regime.


The breakdown in the 10-Year Note (move higher in rates) is arguably the key development over the past week. The weakness in Treasuries lining up with equities and commodities rebounding to close at/near the top of their weekly ranges bolsters our view that risk appetite in the market is increasing. This week there will be a focus on the Small Caps; can they use the tailwind of higher rates to break up and out of the consolidation that has been driving trading since March?

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.