Key Points

  • S&P 500 Retakes the 10-Week Moving Average
  • Signs of a Momentum Shift for Small Caps
  • The 10-Year Note is Likely to Break Support
  • Commodities Remain the Leading Asset Class
  • The Dollar Can’t Seem to Break Resistance

U.S. Equities

The S&P 500 followed through on the small rebound in the previous week to close higher last week, retaking the 10-week moving average in the process. The key level on the downside, in the near term, remains 4,200, where there is price-based support that lines up with the 40-week moving average. Above this level, the S&P 500 is likely to continue moving higher to test the highs reached in early September.

The 14-week RSI remains in a bullish regime, keeping momentum with the uptrend in price.

The S&P Small Cap 600 held above the 10 and 40-week moving averages but made little upside progress last week. The index remains stuck in the consolidation that began in March. We are giving a slight edge to the index making new highs as the 14-week RSI has broken the downtrend from the March peak, signaling that momentum may be shifting back in favor of a bullish trend.

On a relative basis, Small Caps are holding the break of the downtrend line and remain above support despite underperforming the S&P 500 last week.

At the sector level, it was a mixed week for Small Caps. Six sectors finished higher while five closed the week to the downside. The top four groups were:

  • Real Estate – Attacking the highs after a series of higher lows.
  • Materials – Breaking up and out of a consolidation.
  • Technology – Higher lows of late, looking for a test of the recent highs.
  • Utilities – Retake broken support; can they gain upside traction?

After holding support at the rising 40-week moving average in the prior week, the NASDAQ Composite Index is testing the 10-week moving average from below. Retaking the shorter moving average will open the door to an attack on the highs, something that we see as likely since the 14-week RSI is holding in a bullish regime.

Relative to the S&P 500, the NASDAQ Composite is holding above support but struggles to make upside progress. For now, we see the group as an in-line performer.

U.S. Fixed Income

The 10-Year Note continues to test support while trading below the declining 10 and 40-week moving averages. Breaking below the $131 level would open the door to a swift move down to $127. As we discussed last week, below the moving averages, odds favor the trend to the downside holding.

The 14-week RSI has broken the short-term uptrend. While there is still a bullish divergence in play, it has not been confirmed by price, and recent weakness for the indicator signals that downside momentum is being reestablished.

Across the curve, last week saw a bifurcation between the long-end and the short-end. Rates at the front of the curve continued to move to the upside, while rates at the back of the curve have fallen toward support. While we remain in the camp of higher rates, last week’s flattening activity has our attention.



The Bloomberg Commodity Index traded higher once again last week, marking the fifth consecutive week of gains. Strength is confirmed by momentum as the 14-week RSI has pushed further into an overbought condition. Price-based support, near 97, is likely to provide an opportunity on near-term pullbacks.

Relative to the S&P 500, Commodities remain leadership, with room to run to the March 2020 high.

Under the surface of the commodity market, the trends remain the same:

  • Precious Metals – The near-term trend is bearish, but support has not been broken.
  • Industrial Metals – New highs on the heels of a strong move last week.
  • Agriculture – Back in the consolidation.
  • Energy – New highs, remains leadership.

Global Equities

The Global Dow posted a second consecutive week of gains and closed above the 10-week moving average. Strength has put the index near the top of the consolidation that has been in place since May. Odds favor a break to new highs as the 14-week RSI is in the process of breaking the downtrend from the May peak, a signal that momentum is moving back to the side of the bulls.

On a relative basis, the Global Dow remains below resistance. Until this level is overcome, it is hard to make the case that global stocks will lead their peers in the U.S.

The Dollar

The U.S. Dollar Index continues to have a difficult time breaking above resistance at the 94.50 level. The near-term trend remains to the upside, with price above the rising 10-week moving average. However, a lack of momentum is becoming apparent as the 14-week RSI has not been able to reach overbought levels on the move higher in price.

It is interesting to note that commodities have been strong despite a headwind from a strong dollar. Should the dollar fade from resistance, that headwind would be removed, and a weaker dollar could be a catalyst for further commodity strength.


Strength in equity markets for a second consecutive week keeps the benefit of the doubt with the bullish trend. Commodities remain a clear leader across asset classes, with Energy and Industrial Metals driving performance; we see a potential catalyst for further gains in the form of a weaker Dollar. Odds favor a break of support for the 10-Year Note, which is likely to lead to a continuation of the move higher in rates.
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.