Selective Risk-On: Commodities and the Dollar Accelerate, Duration Loses Its Lead
The market remains in expansion, but the combination of rising yields, a strong dollar, and rotation out of technology makes the picture less straightforward. Index resilience does not coincide with a full recovery of the tactical component.
The weekly shift: less euphoria, more inflation and selectivity
| Variable | Current Signal | Periodic Reading |
|---|---|---|
| Risk Appetite | 68 · Greed | Slight cooling from the prior reading of 70: risk appetite remains elevated, but is no longer accelerating. |
| Canary System | Caution | Prudential filter confirmed: credit positive, but TIP still negative. |
| US Equities | SPY −0.59% · QQQ −1.60% · IWM −0.98% | Momentum loss is concentrated primarily in technology; the broad index is holding up better than the Nasdaq. |
| KOSPI | +0.26% 1W · −20.54% 1M | Following the sharp prior correction, a stabilisation is emerging — not yet a genuine repair of the tactical trend. |
| Commodities | DBC +3.86% 1W | The improvement becomes effective leadership and raises the risk of inflationary pressure. |
| Bonds and Dollar | TLT −1.50% · UUP +0.88% | Financial conditions less favourable to duration: yields and the dollar remain the primary constraint for growth and emerging markets. |
Expansion confirmed, but the caution filter remains active
The Risk Appetite Index holds in Greed territory at 68. The Business Cycle Clock remains in the Expansion quadrant, consistent with equities and commodities in a positive trend. The Canary System does not, however, validate a full risk-on and remains on Caution.
- VIX at 18,6: neutral, not signalling stress.
- HYG/LQD, HYG/TLT, S&P distance from 200DMA, and breadth above 200DMA: all risk-on.
- Put/Call at 0,83: neutral.
- TIP negative in the Canary: the inflation-linked/bond segment remains the weak link.
Three assets higher, one falling: bonds are the fault line in the picture
Equity: structure still positive, minimal tactical headroom
SPY remains above the 50DMA and 200DMA, but the price of 738.9 is almost coincident with the 50DMA at 738.4. The negative week and flat month indicate that structural leadership is not translating into acceleration.
Bonds: systemic vulnerability
TLT is below both moving averages, declining across all time horizons, and confirms the bearish quadrant in the WPI as well. Rising yields are the primary compression factor for multiples, duration, and capital-cost-sensitive assets.
Commodities: real leadership
DBC is above its moving averages and accelerating on both a weekly and monthly basis. Strength is not confined to a single segment: energy and agricultural commodities show multiple positive contributions, while precious metals lag behind.
Dollar: broad currency leadership
UUP and DXY remain strong, while the major G10 currencies occupy predominantly weak quadrants. This represents a headwind for emerging markets and companies with significant global financial sensitivity.
Global equity is not collapsing, but leadership is becoming less American and less technology-driven
USA
The Nasdaq 100 is the weakest performer: −1.60% on the week and −5.30% on the month. The S&P 500 and Russell 2000 are correcting to a lesser degree, signalling an internal rotation rather than a broad-based sell-off.
Europe
The FTSE 100 is the only European index clearly positive on the week (+0.62%) and on the month (+2.85%). The Euro Stoxx 50 and DAX remain weak; the DAX is also negative year-to-date.
Asia & EM
The Nikkei and CSI 300 lead on the week. The KOSPI recovers marginally but remains severely impaired over the one-month horizon. Emerging Markets are flat on the week and still weak on the month.
S&P 500 breadth holds, but the tactical WPI does not confirm full market health
The S&P 500's internals are better than the index-level impression suggests: 65,1% of stocks are above the 200DMA and 64,1% above the 50DMA. The Advance/Decline ratio stands at 2.77 and the new highs/lows balance is +43.
The Multi-Asset WPI, however, tells a more cautious story: Long Term at 67, moderate, Short Term at 42, weak. US equity participation is positive, but the cross-asset tactical picture remains fragile.
The rotation is clear-cut: out of technology and consumer discretionary, into real-economy and defensive sectors
Leadership
Energy, Financials, Utilities, Real Estate, Industrials and Healthcare are the most robust clusters. Breadth data confirm the strength: energy 82/82, financials 80/83, utilities 90/94, real estate 71/81.
Transition
Materials is improving, while Staples remains structurally positive but is tactically weakening. RSP in Q1 signals that equal weight is maintaining a healthier base than cap-weighted SPY.
Weakness
Technology, Communication Services and Consumer Discretionary are the areas not to chase. The SOX displays a particularly aggressive weakening trajectory and confirms the loss of semiconductor leadership.
Commodities, the dollar and yields are sending the same message: nominal pressure remains elevated
Energy
Crude oil is moving through the Improving quadrant with strong momentum. Together with DBC's weekly gain of +3.86%, it is the primary driver of inflationary risk.
Agricultural Commodities
Cocoa, wheat, rice and lumber show relative strength. DBA remains bullish on both a long- and short-term basis: the commodity impulse is broader than oil alone.
Precious Metals
GLD and SLV are weakening over the long term and bearish in the short term. The market is rewarding the nominal cycle and industrial/agricultural commodities over traditional monetary protection.
Global leadership is fragmented: peripheral Europe and select real-asset markets are holding up, while Asia remains divided
Europe
Strength is not uniform: select peripheral and defensive markets are leading, while Germany, Finland and Turkey remain under pressure. The FTSE 100 confirms the best resilience among the major indices.
Asia
The picture is highly dispersed. Singapore and Thailand display quality characteristics; Taiwan and Japan are losing momentum; South Korea remains tactically fragile despite still-exceptional year-to-date performance.
Emerging Markets
Dollar strength is preventing a homogeneous leadership pattern. Markets tied to real assets or specific domestic dynamics are outperforming; broad EM beta is not yet a clean theme.
The Dow Jones is rotating away from the mega-cap growth component towards the "old economy"
The screen depicts the composition of the Dow Jones Industrial Average and illustrates its internal rotation. The move does not therefore concern a generic basket of US equities: it describes how relative strength is shifting, within the index itself, away from the growth and consumer component towards financials, industrials, energy and healthcare.
Internal Dow leadership
Financials, industrials, energy and healthcare predominantly occupy the Strong quadrant. Among the visible components, Travelers, JPMorgan, Goldman Sachs, Chevron, Honeywell, 3M, Merck, Amgen and UnitedHealth stand out: this is the core driving the rotation towards the old economy.
Components losing momentum
Relative weakness affects IBM, Walmart, McDonald's, Nike, Disney, Amazon and Microsoft. The reading is internal to the Dow Jones Industrial Average: the index remains supported, but the composition of leadership is shifting, with a diminishing contribution from the growth and consumer component.
Market scenario and confirmation levels
Base scenario
Selective risk-on in nominal expansion. Equities remain above structural support levels, S&P breadth is positive, and the rotation towards real/defensive sectors partly offsets tech weakness. Yields and the dollar are, however, capping multiple expansion.
Positive confirmation
The outlook would improve with the WPI Short Term above 50, a return of SPY/XLK/SOX towards the Improving quadrant, stabilisation in TLT and breadth maintained above current levels.
Deterioration risk
The most dangerous combination would be: SPY below the 50DMA, contracting breadth, WPI Short Term declining further, and yields continuing to accelerate. In that scenario, the rotation would develop into a broader correction.
Key points to monitor in the coming week
- SPY and 50DMA: the margin is almost zero; holding this level is the first tactical test.
- SOX and Nasdaq: assess whether the weakness remains contained or spreads to other sectors.
- WPI Short Term: a recovery above the neutral zone would be the first confirmation of re-acceleration.
- Oil, DBC and the US curve: further strength would increase inflationary risk and pressure on bonds.
- KOSPI: distinguish between stabilisation and a genuine reversal following the −20.54% monthly decline.
Disclaimer
This document represents an informational and research-oriented reading of the market regime, performance, breadth and relative rotations. It does not constitute personalised advice, an investment recommendation, or an offer or solicitation to buy or sell financial instruments. The information is derived from DOMINA's Market Intelligence modules and may be subject to revisions, delays or data-feed errors.
This document was prepared with the support of artificial intelligence tools under human editorial and analytical supervision. The conclusions and ultimate responsibility for the content remain with the author.