U.S. Equities Remain Stuck in Neutral
as Global Stocks Lead Again

by | Feb 14, 2022

Key Points

  • The S&P 500 Remains Between Support and Resistance
  • Small Caps Were a Surprise Leader Last Week
  • The NASDAQ Composite Continues to Lag
  • Ten-Year Note Sees Further Declines
  • Global Dow Moves Higher for a Second Consecutive Week

U.S. Equities

After a valiant attempt to retake resistance at the 4,550 level, the S&P 500 was turned away at the declining 10-week moving average to close the week below the 40-week average. When the bell rang on Friday afternoon, the index remained stuck between those resistance points and support at the January low near 4,220. This leaves the index in a neutral position, searching for a clear direction.

The 14-week RSI is doing all that it can to hold the lower bound of a bullish regime. However, the series of lower highs indicates that upside momentum has waned.

The S&P Small Cap 600 closed higher on the week and remains in a neutral position, trading below the declining 10 and 40-week moving averages but above price-based support. The 14-week RSI remains in a downtrend and is testing the lower bound of a bullish regime.

The week’s rally helped the relative trend in the near term, but it still must contend with resistance. For now, the bears remain in control.

The NASDAQ Composite closed lower on the week, remaining below the 10 and 40-week moving averages and price-based resistance. At the same time, the 10-week moving average is in the process of moving below the 40-week moving average. Momentum continues to wane as the 14-week RSI breaks below the 40 level. Further weakness is likely to be met with support near the 12,500 level.

Relative to the S&P 500, the NASDAQ Composite remains an underperformer, below price-based resistance.

U.S. Fixed Income

The 10-Year Note closed lower again last week, holding below the declining 10 and 40-week moving averages as well as price-based resistance. The Note managed to close off the lows of the week thanks to a rally on Friday, but the bears remain in control until resistance and the 10-week moving average are reclaimed.

At the same time, the yield continues to hold above the 1.75% breakout level.

Global Stocks

For a second consecutive week, the Global Dow closed higher while stocks in the U.S. were mostly under pressure. The index remains above the rising 10 and 40-week moving averages. Price-based support at 4,100 also continues to hold. Above these levels, the bulls are in control of the trend. The 14-week RSI is holding in bullish ranges, lending momentum confirmation to the price action.

Relative to the S&P 500, the Global Dow continues to outperform in 2022. The ratio is in the process of testing an important resistance level. A breakout would increase the odds of continued leadership.

Take-Aways:

Stocks came under pressure in the U.S. last week, keeping the major averages in neutral positions between clearly defined support and resistance levels. While it is tempting to “guess” at which way the averages will break based on the prevailing headlines, we are content to let trends develop before making a decisive call in either direction. Outside the U.S., the Global Dow turned in another bullish week and is on the verge of a relative breakout. Treasuries remain under pressure, pushing rates higher.

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