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Technical Report for the Week of 01/09/23

Technical Summary


Equities – SPX mid-Oct 2022 oversold rally stalled at 4,100.96 (12/13/22 high), encountering pivotal resistance at the Jan/Mar 2022 downtrends (4,022-4,065), the Jun and Sept 2022 highs (4,177.5/4,119), the 50% retracement (4,155) from Jan-Oct 2022 decline, and the 8/23/22 gap-down (4,195-4,219). The Dec 2022 correction nears initial support at 3,764.5 (12/22/22 low). A breakdown, coupled with a violation of Jul/Nov 2022 lows (3,721.5/3,688) and the 61.8% retracement (3,724) from the Oct-Dec 2022 oversold rally, warns of the next decline.


Fixed Income – The 10-year minus 3-mo yield spread (-1.12) has recently broken below the Jan 2001 all-time low of -0.95, confirming another record low. The 10-year minus 2-year (-0.69) has rebounded from Dec 2022 low (-0.84). Based on the average of 6 previous inversions, a recession can occur as early as Dec 2022-Feb 2023. TNX – Correction from 4.333% (10/21/22 high) found key support at 3.40-3.48%. However, the recent failure to clear key initial resistance at 3.77-3.99% warns of a retest of 3.40-3.48% and 3.263%.


Commodities – CRB tests support at 261-264 (61.8% retracement from Dec 2021-Jun 2022 rally and the Sept 2022 low). A breakdown suggests a decline to 241-245. Initial resistance is 276-278.5 (50-day) and 285.5-290. WTI Crude tests key support at 70-74 (2008 channel breakout/30-mo ma). Initial resistance is 80.5-83 (50-da ma) and 93.5-94(200-da ma). Gold rebounds from 1,618-1,622 (Sept, Oct, and Nov 2022 lows) to 1,880-1,883, 1,919, and 1,963-1,966. Support rises to 1,815-1,825 and 1,778-1,788.


Currencies – USD – Sept-Dec 2022 correction nears key support at 102-103 (May 2021 uptrend and the 50% retracement). Initial resistance is 106-106.5 (50-day and 200-day ma). EURUSD – The recovery challenges pivotal resistance at 1.06-1.0787 (May 2021 downtrend and 38.2% retracement). Initial support is 1.032-1.08 (10-mo/ 50/200-day ma). USDJPY – A negative outside day (10/21/22) triggered consolidation to another key support at 130-131 (Jun 2022 breakout and Aug 2022 lows). Initial resistance is 136-136.5 (10-mo and 200-day ma).


S&P 500 Sectors – RRG study shows improvements from the prior week. Five sectors reside in the Leading Quadrant - three strengthening (i.e., Consumer Staples (XLP), Industrials (XLI), and Materials (XLB)) and two weakening (i.e., Financial (XLF) and Healthcare (XLV)). Energy (XLE) slipped into the Weakening Quadrant, suggesting a correction. Communication Services (XLC) joins Utilities (XLU) and Real Estate (XLRE) in the Improving Quadrant. Technology (XLK) joins Consumer Discretionary (XLY) in the Lagging Quadrant.


To view the entire report, go to the Reports tab on the website or click the following:


https://www.leebullbear.com/_files/ugd/f8f1c6_f03d510f65634cf3bee388733a25a616.pdf


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Technical Summary Equities – The Jan-Oct 2022 SPX decline of 1,327.04 points or 27.54% has been painful. However, the ability of SPX to maintain above the 50% retracement (3,505) and most importantly

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