Support Begins
to Give Way

by | May 2, 2022

Key Points

  • The S&P 500 Breaks Important Support
  • Small Caps Lag on the Week
  • The NASDAQ 100 Has Bearish Momentum
  • Ten Year Note Can’t Hold a Rally Attempt
  • Commodities Remain Bullish but Face a Key Test

U.S. Equities

The S&P 500 has broken support at 4,200 as it trades below the 10 and 40-week moving averages. On our most recent episode of Who Charted?, we laid the groundwork for possible downside objectives after a break of support. The 14-week RSI has moved below 40 and remains in a downtrend.

The S&P Small Cap 600 closed on support last week as it remains below the 10 and 40-week moving averages. The 14-week RSI is below 40 and trades in a bearish trend.

The relative trend is bearish below resistance.

The NASDAQ 100 closed the week below the 10 and 40-week moving averages and is testing the lower bound of the 13,000 – 14,000 support zone. The 14-week RSI is shifting to a bearish regime, confirming the price trend for the index.

On a relative basis, it was another week of underperformance as the ratio moves further below the resistance level.

U.S. Fixed Income

In the face of equity weakness, the 10-Year Note tried to rally but was not able to gain traction above the $120 level. The Note remains well below the swiftly declining 10 and 40-week moving averages.

The yield continues to move to the upside, keeping the 3% level in its sights.

Global Equities

The Global Dow is below the 10 and 40-week moving averages and in the process of breaking support. Further weakness has the potential to take the index to the pre-COVID highs. The 14-week RSI is breaking below 40, a sign that momentum is shifting in favor of the bears.

The relative trend remains below resistance in a choppy consolidation that has marked trading for more than a year.

Commodities

The Bloomberg Commodity Index remains in an uptrend, above the rising 10 and 40-week moving averages. The former was tested and held last week, and the index went on to register a small gain. The 140 level remains a key test for the bulls.

The 14-week RSI is near overbought levels, confirming the bullish price action.

Take-Aways

Key support levels are being tested or broken for equities around the world. In many instances, their long-term RSI indicators are sending a momentum confirmation as they break below the key 40 level. The 10-Year Note remains under pressure, and the Yield has eyes for 3%. Commodities remained the leading asset class and closed higher on the week.

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