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Equity markets closed negative for the month of September, led by the Nasdaq 100 (-5.5%) as US markets finally broke a multi-month winning streak. Meanwhile, the US dollar continued to outperform it peers. In fact, it appears that investors may prefer it over the Chinese yuan even though the US could default on its debt obligations.

Bucking the selloff is DBA (soft commodities). Recently, it has been the most explosive-looking chart, especially if it can clear the recent highs and the five-month compression zone.

This Week’s Market Highlights

• Risk gauges have backed off to neutral levels.
• All four of the key US equity indices saw oversold momentum, with the Dow Jones (DJI), the Nasdaq (QQQ), and the S&P 500 (SPY) also being oversold.
• Sentiment indicators in the SPY got oversold, but have been reverting and bouncing off of oversold levels.
• The IWM managed to close the week in a bullish phase.
• Volume patterns show a neutral reading across the board, with QQQ being the weakest.
• The McClellan oscillator on the SPY is maintaining a neutral-to-positive level.
• Bonds (TLT) sold off quickly, but saw a bounce from oversold levels and regained the 200-day moving average (DMA).
• High yield debt (HYG) is outperforming long bonds, which is a bullish indication.
• Utilities (XLU) continue to underperform the SPY, despite typically being used as a risk-off play.
• Volatility is continuing to consolidate and could have an explosive move if it sees a close above $30, which would be another risk-off warning.
• Value stocks (VTV) are now leading both growth stocks (VUG) and S&P 500 on a shorter-term basis, which is an indication that defensive plays are gaining strength.
• Biotech (IBB) crashed below its 200-DMA, Semiconductors (SMH) got hit hard losing the 50-DMA, while regional banks (KRE) are getting help from rising rates and closed positive for the week.
• Transportation (IYT) also held up well on a relative basis and is looking to regain its key moving averages, which would be a big positive for equities.
• The energy sector (XLE), oil (USO), and natural gas (UNG) were the leaders for the week.
• The most market mover across the board is soft commodities, which is looking to breakout from to new highs after a five-month consolidation pattern.
• Gold (GLD) may have doubled-bottomed.

This Week’s Cryptocurrency Highlights

• Bitcoin (BITCOMP) cleared its 50-day Moving Average (DMA) to resume its bull phase after bouncing from oversold levels.
• Ethereum (ETH-X) has also cleared its 50-DMA, and is looking to regain $3,650 before tackling the $4,000 level.
• Uniswap (UNI-X) grew nearly 40% over the past seven days as the new Chinese cryptocurrency ban forces Chinese traders to flock to more anonymous decentralized exchanges.
• Avalanche, which has grown 485% in the past three months and has risen to #13 by market cap, was listed on Coinbase this week, bringing the DeFi coin to the mainstream US market.