Key Points
- The S&P 500 Trades Between Support and Resistance
- Small Caps Continue to Lag
- The NASDAQ Composite Continues to Lose Momentum
- Ten Year Note Breaks Down
- Global Dow May Be the Best Game in Town
U.S. Equities
The S&P 500 closed higher for a second consecutive week, and while this is an encouraging sign for equity bulls, it is hard to make a case that they have retaken control of the situation. The index remains trapped between support at 4,200 and resistance at 4,550. A rally attempt last week was overturned at the declining 10-week moving average, and the 40-week moving average is in the middle of the current zone.
The 14-week is holding a bullish regime but continues to make lower highs.
For the S&P Small Cap 600, a positive is that the index did not break support last week. The negatives remain in place, however. The index is below declining 10 and 40-week moving averages, and the 2021 consolidation zone is likely to provide solid resistance to rally attempts. The 14-week RSI remains in a downtrend and is testing the lower bound of a bullish regime.
The relative trend continued lower last week, fading further from broken support.
The NASDAQ Composite closed higher on the week but did not do much to repair the damage that has been done since the start of the year. The index remains below the 10 and 40-week moving averages and price-based resistance near the 14,200 level. The 14-week RSI is trying to rally but remains in a downtrend and is close to shifting to a bearish regime.
Relative to the S&P 500, the NASDAQ Composite was a slight outperformer last week, but the ratio remains below broken support. The bears remain in control of the relative game.
U.S. Fixed Income
The 10-Year Note is losing the fight at support, as the $128 level is in the process of giving way. Our view has been, and remains, that if the price is below the declining moving averages, the bears are in control. The RSI divergence that we highlighted last week is failing to provide a catalyst for price and the indicator has moved back into oversold territory.
At the same time, the yield has broken higher and remains above support at the 1.75% level.
Global Stocks
While the major averages in the U.S. struggle to repair the technical damage that has been done since the start of the year, and trade below their moving averages, the Global Dow has held firm. The Global Dow is above the 10 and 40-week moving averages and price-based support near 4,100. The 14-week RSI has yet to threaten the lower bound of a bullish regime, keeping momentum in favor of the bulls.
Relative to the S&P 500, there has been continuous improvement since the start of 2022. A break of resistance will put the bulls in control, setting the stage for further outperformance.
Take-Aways:
Stocks in the U.S. remain in repair mode, trying to fix the damage that has been inflicted on them since the start of the year. At the same time, stocks outside the U.S. (represented by the Global Dow) are trading above their key weekly moving averages and are holding above important price-based support. This dynamic unfolds amidst a move higher for the 10-Year Yield in the U.S.
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