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Technical Report for the Week of 02/06/23


Equities – SPX – The Jan-Oct 2022 SPX decline of 1,327.04 points or 27.54% has been painful. The rebound from key support at 3,491.58 (10/13/22 low) has also been impressive (+20.19% gains). Mid-Oct 2022 rally has led to a breakout above the Jan 2022 primary downtrend (4,036), the 38.2-50% retracements (3,998/4,155), a golden cross-buy, and a higher-high pattern (4,101 – Dec 2022 highs). Initial support rises to 4,101-4,119 (Sept/Oct 2022 highs), 3,915-3,957 (50/200-day ma), and 3,764.5-3,810 (May/Dec 22 lows).


Fixed Income – The 10-year minus 3-mo yield spread (-1.17) has broken below the Jan 2001 all-time low (-0.95), setting a new record low (-1.32). An oversold condition hints at a bounce. The 10-year minus 2-year (-0.77) is resuming its downtrend via a breakdown below a higher-low at -0.74 (Jan 2023 low). TNX – Correction from 4.333% (10/21/22 high) rebounded from pivotal support at 3.248-3.35% (200-day ma). Below this suggests 3.12% (2020 uptrend) and 2.39-2.525% (2021 uptrend). Initial resistance is 3.588-3.71%/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) but struggles near key initial resistance at 274-280 (Dec 2022 highs/50-day ma). WTI Crude rebounds from intermediate-term support at 70-74.5 (2008 channel breakout and 30-mo ma) but fails near key initial resistance at 81.5-83 (50-day ma). Gold’s rally from 1,618-1,622 (Sept, Oct, Nov 2022 lows) fails near key initial resistance at 1,963-1,975. Initial support is 1,824.5-1,846/1,778-1,790.


Currencies – USD – Selloff violated support at 101.26-101.42 (May 2022 and Jan 2023 lows). An oversold condition hints at a rebound to initial resistance at 103.5-104 (50-day ma). EURUSD – Rally surpasses resistance at 1.09-1.093 (50% retracement from 2021-2022 decline). An overbought condition prompts a consolidation to initial support at 1.067-1.0735. USDJPY – A head and shoulders top warns of a peak. Below the second neckline at 126.36-127.49 (May and Jan 2023 lows) confirms a top. Resistance is 130.5-131.5/133-135.


S&P 500 Sectors – RRG study shows similar rotations from the prior week. Materials (XLB) is the only sector in the Leading Quadrant with weak momentum. Five sectors weakened in the Weakening Quadrant (i.e., Consumer Staples (XLP), Industrial (XLI), Healthcare (XLV), Financial (XLF), and Energy (XLE). Technology (XLK), Communication Services (XLC), Utilities (XLU), and Real Estate (XLRE) strengthen in the Improving Quadrant. Consumer Discretionary (XLY) also improves within the Lagging Quadrant.


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