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Key Points

  • S&P 500 Battles the 100-Day Moving Averages
  • Small Caps Meet Resistance in Their Consolidation Zone
  • The NASDAQ 100 Tries to Turn the Corner
  • Commodities Remain Above Support
  • The 10-Year Note Continues to Build a Base

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Mid-Week Market Update – United States

The S&P 500 has found the 100-day moving average, which is in line with the early June peak. The trend here has become neutral. While this is an improvement from what was seen for most of 2022, the bulls have yet to take full control. The 50-day moving average provides a good spot to manage risk, near the 3,900 level.  

Momentum has improved over the past two weeks, breaking above the 60 level as it tries to exit a bearish regime.

The S&P Small Cap 600 is above the 50 and 100-day moving averages but remains in consolidation between support and resistance. The trend here is also neutral, with clearly defined levels for adding exposure and managing risk. Momentum has improved, with the 14-day RSI cracking the 60 mark.

The relative trend remains neutral, dancing with the 50-day moving average while holding below the key October/November peaks.

The NASDAQ 100 is above the 50 and 100-day moving averages pushing the trend to a neutral position. Support in the 12,200 – 12,300 zone can be used as a level for managing risk in the near term. Momentum has improved, with the RSI pushing above 60.

The relative trend is improving, a dynamic that should be watched closely.

The 10-Year Note continues to battle the 100-day moving average as it builds a base in the area of the 2018 lows. Th3 50-day moving average has shifted from declining to flat, a sign that downside momentum has clearly stalled.

The 14-day RSI moved above 60, and we are now looking for it to hold 40 on pullbacks to signal that the regime is shifting.

The Bloomberg Commodity Index remains in a state where the short-term trend is pressured while the long-term trend is intact. Above support at 106, the secular uptrend from the 2020 lows holds the benefit of the doubt. Breaking the 50 and 100-day moving averages would be a signal that the bulls are regaining control of the short-term trend as well. Momentum is neutral, with the 14-day RSI in the middle of the range.

The relative trend is at a key level of support below the 50-day moving average.

The CBOE S&P 500 Volatility Index (VIX) and its 10-day moving average continue to trend to the downside, signaling that fear has been abating. However, we note that both are still at elevated levels relative to what we normally see in bull markets.

Echoing the decline in the VIX, the ATRs across timeframes continue to move in a more bullish direction. The 21-day and the 63-day metrics have broken the trend. The 126-day ATR still has work to do. Should these metrics continue to move lower, it would be a positive development for equity bulls.

Take-Aways:

After fighting off their backs, the bulls have pushed trends in the equity markets into a neutral position. Support levels have been established, which can be used to manage risk for those who have been adding exposure. However, we note that there is still work to be done before we can state that the bulls are back in control. A continued decline in volatility would be an upside kicker. The 10-Year Note continues to build a base. Commodities remain in a secular uptrend.

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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.