Equities – The mid-Oct 2022 SPX oversold rally nears pivotal resistance at the Jan/Mar 2022 downtrends (4,014-4,064). A breakout coupled with a surge above the Sept/Dec 2022 highs (4,119/4,101) and the 50% retracement (4,155) from Jan-Oct 2022 decline confirms the next SPX rally to intermediate-term resistance at 4,307.5-4,325 (May and Aug 2022 reaction highs and the 61.8% retracement). Initial support is 3,914 (50-day ma) and below this 3,764.5 (12/22/22 low). A breakdown below 3,688-3,721 confirms the next SPX decline.
Fixed Income – The 10-year minus 3-mo yield spread (-1.18) has broken below the Jan 2001 all-time low (-0.95), confirming another record low (-1.23). The 10-year minus 2-year (-0.73) attempts to rebound from Dec 2022 low (-0.84). However, based on the six previous inversions, another recession is likely as early as Dec 2022-Feb 2023. TNX – Correction from 4.333% (10/21/22 high) retests key support at 3.40-3.48%. A breakdown signals a decline to 3.25-3.29% (200-day ma and Jun 2022 breakout). Initial resistance is 3.63-3.72%/3.91-3.99%.
Commodities – CRB rebounds from key support at 261-264 (61.8% retracement from Dec 2021-Jun 2022 rally and the Sept 2022 low). Initial resistance is 275-280 (50-day ma and Dec 2022 highs). WTI Crude rebounds from intermediate-term support at 70-74.5 (2008 channel breakout and the 30-mo ma). Initial resistance is 79.5-83 (50-day ma) and 92-94 (200-day ma). Gold rebounds from 1,618-1,622 (Sept, Oct, and Nov 2022 lows) toward 1,919, 1,963-1,966, and 2003. Initial support rises to 1,816.5-1,824.5 and 1,778-1,790 (200-day ma).
Currencies – USD – Sept 2022 correction nears intermediate-term support at 101.5-102.5 (May 2022 low and the 50% retracement). Initial resistance is 105.5-106 (50/200-da ma). EURUSD – Recovery nears next resistance at 1.09 (50% retracement from 2021-2022 decline). Initial support is 1.0735 and 1.031-1.0483 (50/200-day ma). USDJPY – A negative outside day (10/21/22) triggered consolidation to another test of key support at 130-131 (Jun 2022 breakout and Aug 2022 lows). Initial resistance is 136-1367 (10-mo and 50/200-da ma).
S&P 500 Sectors – RRG study shows an increase in rotations. Four sectors remain in the Leading Quadrant, with all four sectors weakening (i.e., Consumer Staples (XLP), Industrials (XLI), Materials (XLB), and Financial (XLF). Healthcare (XLV) slips into the Weakening Quadrant joining Energy (XLE). Technology (XLK) joins Communication Services (XLC), Utilities (XLU), and Real Estate (XLRE) in the Improving Quadrant. Consumer Discretionary (XLY) improves within the Lagging Quadrant.
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