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Technical Report for the week of 02/13/23

Equities – SPX rebounds from key support at 3,491.58 (10/13/22 low), prompting a sharp recovery that has surpassed key resistances. The ability to surpass the Jan 2022 primary downtrend (4,008), the 50-day/200-day ma (3,969/3,945), and the Dec 2022 highs (4,101) hint at a bottom. The next key resistance is 4,177.5-4,279 and 4,325 (Aug 2022 reaction high). Initial support is 4,040-4,101 (Jan 2023 uptrend and 2/1/23 breakout) and below 4,008 (extension of Jan 2022 downtrend), and 3,945-3,969 (50-day and 200-day ma).

Fixed Income – The spread between the 10-year yield minus the 3-month yield fell to -1.32% (1/18/23). A higher low of 1.27 (2/1/23) hints at an oversold rally. The 10-year minus 2-year yield spread (-0.76) has declined to a low of -0.82 (2/8/23). Is a higher-low developing (-0.84 on 12/7/22 and -0.82 on 2/8/23)? TNX – Correction from 4.333% (10/21/22 high) found pivotal support at 3.248-3.371% (200-day ma), prompting a recovery to key initial resistance at 3.584-3.69% and above to 3.905-3.99%, and 4.22-4.33%.

Commodities – CRB rebounds from key support at 261-264 (61.8% retracement from Dec 2021-Jun 2022 rally and the Sept 2022 low). Recovery nears key initial resistance at 273-280 (Dec 2022 highs/50-day ma). WTI Crude rebounds from intermediate-term support at 70-76 (2008 channel breakout and the 30-mo ma) to key initial resistance at 81.5-83 (50-day ma) and 89.5/91.5-94. Gold’s rally from key support at 1,622.22 (Sept, Oct, Nov 2022 lows) stalls at 1,975.20 or near key resistance. Initial support is 1,859-1,864/1,825.

Currencies – USD – A successful test of intermediate-term support at 99.15 (61.8% retracement from May 2021-Sept 2022 decline) triggers an oversold rally to initial resistance at 103.5-104 (May 2021 uptrend and the 50-day ma). EURUSD – Rally peaked at 1.1033 (2/2/23), prompting consolidation to initial support at 1.067-1.0735 and below 1.0483-1.05. USDJPY – A head and shoulders top still warns of a top. Below the second neckline at 126.36-127.49 (May and Jan 2023 lows) confirms a top. Resistance is 132.5-133/135/137-138.

S&P 500 Sectors – RRG study shows many changes from the prior week. All eleven sectors reside in either the Weakening or Improving sectors. Six are in the Weakening Quadrant, with Materials (XLB), Consumer Staples (XLP), Industrial (XLI), Healthcare (XLV), Financial (XLF), and Energy (XLE) weakening. Consumer Discretionary (XLY) joins Communication Services (XLC), Utilities (XLU), Technology (XLK), and Real Estate (XLRE) in the Improving Quadrant, with XLU weakening and XLC and XLK strengthening.

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