top of page

Markets, Credit Suisse, and Bonds

In this update, we will provide some commentary on the current state of the markets, Credit Suisse, and the status of bonds.

Starting with the markets, the S&P 500 continues to hover around its 200-day moving average. Moving averages can often act as points of support or resistance. The S&P 500 broke above and rallied above its 200-day moving average, for the first time since January 2022, back in late January of this year. The S&P 500 remained above the moving average for a few weeks, before the index dropped below temporarily. It then rallied broke back above the 200-day moving average last week.

The chart below shows the S&P 500 index, its 200-day moving average. The lower half of the chart shows the overbought/oversold conditions for the S&P 500. When the blue line crosses above the top horizontal line, the index’s price has gone up too fast (“overbought”). When the blue line crosses the bottom horizontal line, it means that the price has dropped too fast and is now “oversold.”

Source: Canterbury Investment Management. Chart created using Optuma Technical Analysis Software.

Market Rotations

In terms of sector leadership, the technology-related sectors (Info Tech & Communications) continue to lead the other nine US S&P 500 sectors in risk-adjusted relative strength. Financials and Real Estate round out the bottom of the sector rankings.

From a global perspective, European stocks are still leading the domestic equities on a risk-adjusted relative strength basis. The news relative to Credit Suisse caused a scare in many European indexes. Now, it is starting to look increasingly likely that this was just a one-day blip. Both the EAFE index and Euro Stoxx 50 index have returned to the price levels that they were at prior to the Credit Suisse news breaking.

Speaking of Credit Suisse, we want to point out that this was a banking stock that was in a clear and compelling bear market (had been going down) prior to the release of the negative news that caused a selling panic on March 15th. The stock’s ultimate high occurred back in 2007. In February 2021, it was trading for $15 per share. At the start of 2022, it was close to $10 per share. On March 14th, which is the day prior to the stock’s single day -14% decline, it was trading for $2.50. Now, it’s worth about $0.86. Just as a reminder, don’t try to catch a falling knife and to try to buy stocks that are dropping fast.


It is no secret that bonds had struggled mightily in 2022. Let’s check into the bond markets right now. Long-term bonds, 20-year treasuries, are currently in a sideways trading range, with a lot of overhead supply to overcome. In other words, there are a lot more investors that have wanted to get out of bonds than those who wanted to buy them. Looking at the Treasury Bond ETF (TLT), the fund has trended sideways for the last few months. This is following a significant, -40% peak-to-trough decline that began back in 2020.

Overhead resistance is a “psychological” point of contention for investors. At the point of resistance, individuals may think “now is my time to get out before another decline.” At a point of support, the opposite occurs and investors consider the pricing level as a potential entry point. In the chart below, you can see that TLT has now touched overhead resistance at 3 different times before declining. Most recently, this resistance point intersected the fund’s 200-day moving average, which can also behave as resistance (the point it cannot break above).

Source: Canterbury Investment Management. Chart created using Optuma Technical Analysis Software.

As of right now, the Treasury Bond ETF’s price is in a trading range between the two parallel lines. Even if bonds do break above the upper resistance line, there is still plenty of overhead supply left to fight through.

Bottom Line

There is no predicting the future of the markets, but there are the realities of right now. The S&P 500 is hovering above its 200-day moving average, and technology sectors are leading. Those same tech sectors had lagged the market and dragged it down during 2022. It is a positive sign that those previously weak sectors are beginning to relatively outperform more “defensive” market segments.

I saw an interesting tweet posted by fellow Chartered Market Technician, Ryan Detrick. Basically, there are a lot more funds out there today that are “overweight” cash and “underweight” US equities. That means that there is a lot of cash on the sidelines, and not as much money in stocks. Remember, markets are counterintuitive. They do what the masses would least expect, when least expected. More cash on the sidelines could mean that many have already sold out of the markets, and are now all potential buyers. Time will tell.


bottom of page