After failing a key test in the prior week, the bulls gave the bears an opening, and they promptly capitalized on it. Pressure on equities has pushed trends back to a neutral position, confirmed by momentum reading in the middle of their ranges. Unfortunately for balanced portfolios, bonds did not provide much cover, continuing a prominent 2022 trend. Commodities, however, did provide a port in the storm as we have been highlighting the ongoing secular trend. Finally, the U.S. Dollar Index continues to send a message of risk-off.
U.S. Equities
The S&P 500 closed sharply lower in the week after failing to break above the 40-week moving average in the prior week. The index remains above the rising 10-week moving average, as well as price-based support. Thus far the 14-week RSI has held above 40-level but now sits in the middle of the range, pointing to a neutral trend for prices. A confirmed move above the 40-week would signal that the bulls have taken control, while a break of support near 3,900 would put the bears in top position.
The S&P Small Cap 600 Index also closed lower and is now trapped between the declining 40-week moving average and the rising 10-week moving average. There is price-base support near the 1,200 level. Momentum is neutral, with the 14-week RSI in the middle of the range.
The relative trend remains neutral, below price-based resistance.
The NASDAQ 100 moved lower to test the rising 10-week moving average, below the declining 40-week moving average. Support at the 12,000 level is a key line for the bulls to defend in the near term. Momentum is neutral, with the 14-week RSI in the middle of the range.
The relative trend continues to fade from resistance, leaving another lower high on the chart. Until this level is overcome, odds favor continued underperformance.
U.S. Fixed Income
The 10-Year Note remains under pressure, testing the 2018 lows below the 10 and 40-week moving averages. The bull case is that this is still part of a base-building process. The bears are looking for a break of support.
The yield remains testing resistance near 3.20%, and we are watching this level closely as a move above it points to further upside.
Pressure on the Treasury prices was evident across the curve, sending yields higher once again. The moves were, again, more pronounced at the long-end of the curve after the 20 and 30-Year Bonds held support.
The iShares Core U.S. Aggregate Bond ETF (AGG) remains under pressure, trading below resistance, the 10-week moving average, and the 40-week moving average. Below $104, the bears are in control of the trend.
Global Equities
The Global Dow has pulled back to test the 10-week moving average below the declining 40-week moving average. Support near 3,500 is a key level for the bulls to defend. Below the mark, the bears would take control of the trend.
The relative trend remains under pressure but saw a small improvement last week.
Commodities
The Bloomberg Commodity Index moved higher last week, continuing to reassert a bullish trend above the 10-and 40-week moving averages. The moving averages should provide a level of near-term support, while stronger support remains near the 106 mark.
The 14-week RSI is moving higher after holding support at the 40-level.
Agriculture and Industrial Metals did much of the heavy lifting in the commodity space last week, continuing to move higher from support. Precious Metals remain in consolidation and are now testing support. The secular uptrend in Energy is still in place.
U.S. Dollar
The U.S. Dollar Index remains a key proxy for risk appetite in the market. The index powered higher again last week, extending above the 10-week moving average, which is well above the 40-week moving average. Above the 103 level, the environment is more risk-off.
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