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Technical Report for the Week of 03/06/23

Technical Summary


Equities – SPX – A head and shoulders bottom continues to develop. A positive outside day (3/2/23) and gap-up (3/3/23) hints at a successful test of crucial support near 3,928-3,987.5 (3/2/23 low, extension of the Jan 2022 downtrend, 50/200-day ma). Violation of 3,928 warns at a deeper correction toward 3,721.5-3,810 (May, Jul, and Dec 2022 lows) and below this 3,637 (Jun 2022 low) and 3,491.58 (Oct 2022 low). Resistance is 4,101-4,119 (Sept/Dec 2022 highs) and above this 4,177.5-4,195 (Jun 2022 and Feb 2023 highs), and 4,325.28 (Aug 2022 highs).


Fixed Income – TYX (monthly chart) – Breakout above 3.02% (top of the 1981 structural downtrend channel) and 3.455% (2018 high), confirm a reversal of the 42-year structural downtrend. TNX (monthly) – A 10-year head and shoulders breakout above neckline resistance at 3.036-3.248% warns of a structural breakout in US interest rates. TNX (daily) – Failure to breakout above 3.905-4.091% (Sept/Dec 2022 highs and the 3/2/23 island reversal day) hints at consolidation to initial support at 3.438-3.686% (50-day/200-day ma).


Commodities – CRB rebounds from critical support at 261-264 (61.8% retracement from Dec 2021-Jun 2022 rally and the Sept 2022 low). Key resistance is 275-280 and 284-287.5 (200-day ma). WTI Crude rebounds from intermediate-term support at 70-72 (Dec 2022 and Jan/Feb 2023 lows) Key initial resistance is 80.5-83 (Dec 2022 and Jan/Feb 2023 highs) and 85.5-86. Gold rebounds from key support at 1,810.80 (2/28/23 low). Key initial resistance is 1,872-1,882.5 (Jun 2022 high and 50-day ma) and 1,919.


Currencies – USD – The rebound nears key resistance at 105.5-106.5 (200-day ma). Initial support remains at 102-103 (50-day ma) and 100.68-101.42 (May and Feb 2023 lows). EURUSD – Sept 2022 rally to 1.1033 (2/2/23) stalls, prompting correction to retest support at 1.033-1.0483 (200-day ma). Initial resistance is 1.073-1.0735 (50-day ma). USDJPY – A head and shoulders top warns of a top. The Jan-Feb 2023 rally nears key resistance at 137-139.5 (200-day ma). Key initial support is 130.5-132 (50-day ma) and 126.5-127.5.


S&P 500 Sectors – RRG study shows more rotations from the previous week. Materials (XLB), Industrial (XLI), Financial (XLF), and Energy (XLE) continue to fall within the Weakening Quadrant. Consumer Staples (XLP) and Healthcare (XLV) join Utilities (XLU) in the Lagging Quadrant. Consumer Discretionary (XLY) and Technology (XLK) enter the Leading Quadrant. Consumer Discretionary (XLY) continues to strengthen and Real Estate (XLRE) weakens within the Improving Quadrant.


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