Take-Aways:
We remain open to the idea of a countertrend rally in risk assets that takes the S&P 500 toward 3,900. However, we would need to see the major indexes hold above their 10 and 40-week moving averages to have confidence that rallies will have staying power. Treasuries remain an “unsafe” haven while commodities hold above an important support level.
U.S. Equities
The S&P 500 rallied last week but remained below the declining 10 and 40-week moving averages. The index has support near 3,400 and resistance near 3,900. We remain open to the idea of a countertrend rally toward this resistance zone.
The 14-week RSI has made a higher low recently, leaving a bullish divergence on the chart.
The S&P Small Cap 600 Index also rallied during the week. The index continues to trade below the 10 and 40-week moving averages but is holding support in the 1,000-1,050 zone. Here too, the 14-week RSI has made a higher low of late.
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 as it battles support near the 11,000 level. The index remains below the declining 10 and 40-week moving averages, which must be broken before a serious bullish case can be made.
The relative trend continues to trade below resistance. Odds favor continued underperformance.
U.S. Fixed Income
The 10-Year Note closed lower once again last week, continuing a streak that has been in place since key support at the 2018 lows was broken. The Note is trading below the declining 10 and 40-week moving averages to keep the bears in control of the match.
The yield remains above the 3.20% – 3.50% support zone, increasing the odds of a continuation to the upside.
Global Equities
The Global Dow closed higher on the week as it fights to hold support at the pre-COVID levels. The index remains below the declining 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 further 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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