Key Points

  • Five-Day Losing Streak Pushes the S&P 500 to a Key Level
  • Small Caps Continue to Lag as They Trade in Their Consolidation
  • NASDAQ is Leadership
  • Commodities are Resilient, Closing Near the Top of the Range
  • The Dollar is Stuck Below Important Resistance

U.S. Equities

The S&P 500’s five-day decline has brought the index back to the rising 10-week moving average, which has been an important support level for much of the uptrend in 2021. With the 14-week RSI no longer overbought, there is reason to believe that the 10-week moving average will provide support once again. Should that fail to be the case, the zone between 4,000 and 4,200, which holds the 40-week moving average, will become important.

The S&P Small Cap 600 Index remains in the consolidation that has been playing out since March after also coming under pressure last week. The index closed below the 10-week moving average but above the 40-week moving average as these two measures of trend converge. The 14-week RSI is in the middle of the range, after a series of lower highs, confirming the rangebound price action for the index.

The relative trend (vs. the S&P 500) remains bearish, with downside potential to the June 2020 peak.

All sectors within the Small Cap universe came under pressure last week. Four that held up better than the others were:

  • Energy – rebound from support beginning to stall.
  • Staples – sloppy consolidation but support is holding for now.
  • Materials – higher highs and higher lows since holding support in July.
  • Industrials – consolidation continues to play out.

The NASDAQ Composite Index was not spared from the selling pressure that gripped stocks last week. However, the uptrend for this group remains very much in place, with price above the 10-week moving average as well as key support levels. Selling pressure has helped to alleviate the overbought position of the 14-week RSI, which remains in a bullish regime.

On a relative basis, the NASDAQ remains an outperformer. The ratio is holding above an important support zone, keeping the odds in favor of continued leadership.

U.S. Fixed Income

The 10-Year Note closed lower last week, failing to act as a haven as stocks came under pressure. The Note has failed at the converging 10 and 40-week moving averages and is now trading below the key $134 level that we have been highlighting. Lower prices, and therefore higher rates, were perhaps a key reason why three of the better performing Small Cap sectors last week were cyclicals. We are now on watch for a breakdown which would be confirmed with a move below the uptrend line.

The 14-week RSI is in the middle of the range, rolling over after failing to leave a bearish regime.

Over the past two weeks, rates have move higher across the curve with the moves more pronounced at the front-end.

Global Equities

The Global Dow also came under pressure last week, fading from the top of the consolidation range that has marked trading since June. The index remains above the flat 10-week moving average as well as the rising trend line from the March 2020 lows. The 14-week RSI is in a bullish regime.

Relative to the S&P 500, the Global Dow is trying to rebound but remains below near-term resistance. A break above that resistance level could signal the start of a trend out outperformance on the part of global equities vs. the S&P 500.


As equities sold off last week the Bloomberg Commodity Index was much more resilient, rebounding to close near the top of its recent range. The index remains above the 10-week moving average and the key 91 level. The 14-week RSI is holding bullish ranges as it tries to break the downtrend that has been in place since the May peak.

On a relative basis, Commodities are pushing toward the top of the consolidation as the base-building process continues to play out.

Within the commodity complex, performance was mixed on the week

  • Precious Metals – carving out a base, but little upside traction.
  • Industrial Metals – clear leadership following a breakout.
  • Agriculture – fading after a rally attempt.
  • Energy – still rebounding after a successful test of support.

The Dollar

The U.S. Dollar Index is below the 10-week moving average after failing to breakout and hold above 93. The 14-week RSI is in the middle of the range but has not been able to exit a bearish regime. A failure to retake 93 opens the door to a move to the consolidation lows, near 89.


The S&P 500 enters the new week amid a five-day losing streak, but odds favor the rising 10-week (50-day) moving average continuing to act as support to pullbacks in what remains a bullish trend. The NASDAQ composite continues to be leadership while Small Caps are rangebound underperformers. The 10-Year Note is on watch for a breakdown after failing at resistance. Should a breakdown take hold, further strength in the Commodity complex is likely, especially with the Dollar below resistance.

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.