Key Points

  • Three Record Weeks in a Row for the S&P 500
  • Small Caps are Losing their Leadership Role
  • The 10-Year Note is on the Verge of a Breakout
  • U.S. Over the World as Global Stocks Lag
  • Commodities Consolidate with the Dollar

U.S. Equities

The S&P 500 set a weekly closing record for the third consecutive week, continuing to move higher from the choppy consolidation that had been in place since early May. The index has support at the breakout level, near 4,250, which contains the rising 10-week moving average. Below that, the 40-week moving average in the 3,900 – 4,000 zone will become important.

The 14-week RSI is in an overbought position, lending a momentum confirmation to the bullish price trend.

On an absolute basis, the S&P Small Cap 600 closed below the 10-week moving average, which is shifting from rising to flat as the index trades in a consolidation. The key support zone that we have been highlighting was tested and held last week. However, the 14-week RSI continues to roll over, a sign that upside momentum is waning.

On a relative basis, Small Caps have broken support vs. the S&P 500. The case can be made that the group is giving up the leadership position that it had had since last fall.

It was a mixed week for Small Caps, at the sector level, with many groups trading in sync with the index by staging a late rally. This week’s highlighted sectors are all showing signs of stabilization but have a lot of work to do to reach new highs.

  • Real Estate – Still an uptrend, closest to a new high
  • Materials – Wide, sloppy consolidation
  • Utilities – Holding support for now
  • Consumer Discretionary – Choppy, above support

Although it was a struggle, the NASDAQ Composite Index closed at a record high last week, above the rising 10-week moving average. The confirmed break from the February – June consolidation moves near-term support up to the 14,250 level. More important support for the long-term uptrend remains near 12,800.

Relative to the S&P 500, the NASDAQ is holding above support and is showing signs of regaining the leadership position that it held for much of 2020.

U.S. Fixed Income

The 10-Year Note has staged a rally over the past two weeks after re-taking the 50-day moving average which is now beginning to move higher. That rally has, thus far, stalled at the $134 level that we have been highlighting as important for some time. Downside support is near the $130 level.

The 14-day RSI is in the middle of the range and not providing much of a “tell” in either direction. Recent strength was not able to produce an overbought condition, but we note that the indicator has not been oversold since April.

Across the Treasury curve, rates continue to move lower with the pressure on yields more pronounced at the long end. This flattening of the yield curve is one of the datapoints that support the shift in leadership currently playing out in the equity market.

Global Equities

Global stocks staged a late-week rebound, but it was not enough to push the Global Dow to a weekly close above the 10-week moving average. At the same time, momentum continues to wane, with the 14-week RSI moving further below the 70 level.

Relative to the S&P 500, the Global Dow remains in a consolidation but still cannot gain much in the way of upside traction.


The Bloomberg Commodity Index is holding above support and the rising 10-week moving average. In the near-term trading has become choppier, as opposed to the steady uptrend that had been in place since the April 2020 lows. This is likely a function of the index “working off’ the extreme overbought levels reached by the 14-week RSI recently.

Drilling down on the major groups within the commodity complex, except for Energy, which is in an uptrend, there is mostly counter-trend weakness after strong moves higher from the 2020 lows. Much of this consolidative activity needs more time to play out.

The U.S. Dollar

The U.S. Dollar Index continues to trade in a wide range, like the 10-Year Note. Price is above the 10-week moving average, but that average is still declining. Resistance is near the 94.50 level while support remains at the 2018 lows. The 14-week RSI remains in the middle of the range, confirming the price action.

A breakout would likely coincide with leadership on the part of the NASDAQ as well as the U.S. outperforming the rest of the world.


U.S. equities remain the best game in town but leadership within the U.S. market appears to be tilting back to the NASDAQ as Small Caps have begun to stall out. This stalling plays out as “the curve” in the U.S. Treasury market flattens, removing a key catalyst for Small Cap outperformance. The 10-Year Note, and the Dollar likely hold the keys as to how long this shift may last. Should they break resistance, it would likely mean that the NASDAQ has fully regained its spot at the front of the pack.

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.