Morning Notes — Support Levels and the SVX

SPX: The S&P 500 failed to break pattern resistance yesterday with intraday levels suggesting a pullback to immediate support into last Tuesday’s upside gap around 4590.  Much stronger medium-term support sits in the 4430-4498 zone and .

NDX: We’ve been expecting the NASDAQ 100 (NDX) to underperform the SPX into Q1’22, and the larger pullback yesterday/today fits the outlook.  Tech, and software in particularly tends to underperform during tightening cycles.  Crowded positioning and the potential for multiple contraction based on rising real yields has us defensively positioned relative to where we were 6, 9 and 12 months ago.  Near-term support for the NDX sits in the 15150-15700 range.  We expect it will hold, but expect underperformance vs. the more cyclically sensitive indices in the months ahead.

SVX: The S&P 500 Value Index (SVX) is a cyclically sensitive index with the highest weightings in Financials, Consumer Discretionary, Energy and Materials. The index has already been through a consolidation phase that began in May and bullishly reversed from a cluster of support in the 1410-1450 range.  Now above 1500, the index has cleared the late-November pattern break at ~1490 with intermediate momentum now positively biased.