SAMT Blog
S&P500: 2022 still Low of the Four-Year Cycle due Later
27. May 2022, by Bruno Estier
Technical Analysis
At the end of May 2022, the rotation from Growth toward Value and the rising 10-year US Treasury yield, which reached 3.17%, has evolved into a Bear market as the S&P500 has declined well below 4100 toward 3810, but has not yet reached the 3600 target envisioned for the autumn of 2022.
Indeed, as seen on the upper panel, the Relative Strength of the Nasdaq versus the S&P500 (red dotted line) has kept declining during April and May as large-cap technology stocks have also broken major supports. However, small caps have declined less as shown by the bottoming Relative Strength line (green dotted line). The flat Relative Strength line of emerging markets (orange solid line) versus the S&P500 during April, and slightly rebounding during May, suggests that the correction has been global and that the US large caps were probably the last ones to decline.
The steep decline of the S&P500 and the rise of the VIX (orange dotted line) to higher highs near 33% in April versus February have moved the weekly momentum indicators on the lower panel to oversold levels. The MACD is reaching negative levels as low as during the Covid crisis of March 2020. The STO has reached an oversold area but has also recently crossed up as it displays some bullish divergences. This should mean that after the spike at 3810, a rebound is likely underway during the last days of May. The duration of the rebound will depend on the abili...
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