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Technical Report for the Week of 03/27/23

Technical Summary


Equities – A mixed SPX market suggests an ongoing battle between the bulls and bears, evidenced by a bullish Feb 2023 descending broadening wedge and two bearish head and shoulders tops (Nov 2022 and Jan 2023). Key support is 3,760.5-3,809 (Dec 2022/Mar 2023 lows and the 61.8% retracement from Oct 2022-Feb 2023 rally). Violation confirms a top and warns of a deeper correction. Initial resistance is 4,039,5-4,119 (left/right shoulders), 4,195.5 (head), and 4,308-4,325 (neckline of the Jun 2022 h/s bottom).


Fixed Income – TYX (monthly) – Above 3.0-3.03%/ 3.455% (2018 high) confirms structural breakout. A 3/2/23 island reversal warns consolidation to 3.413-3.635% (200-day ma). TNX (monthly) – Breakout above 3.036-3.248% suggests a structural breakout. A negative outside month (Mar 2023) warns of consolidation to 3.036-3.248%. TNX (daily) – Island reversal (3/2/23), gap-down (3/10/23), and negative outside month (Mar 2023) hint at consolidation to initial support at 3.248-3.495%. Initial resistance is 3.5-3.66% (50-day/200-day ma).


Commodities – CRB – 2022 downtrend channel at 249-250 (support) and 269-273 (resistance). An oversold rally nears initial resistance at 263.5-265.5 (Sept/Oct 2022 and Jan 2023 lows). WTI Crude – Ability to find support at 64.36 (Aug/Dec 2022 lows and the bottom of 2022 downtrend channel) nears key initial resistance at 72-73.5 and 76.5 (Mar 2023 breakdown and 50-day ma). Gold breakout of key resistance at 1,960-2,003 (Mar 2022 downtrend and Apr 2022/Feb 2023 highs) renders a retest of 2,078.80 (3/8/22 high).


Currencies – USD – A 1-year head/shoulders top warns at a peak. Neckline support is 100.68-101.42 (May 2022 and Feb/Mar 2023 lows). Right shoulders are 105.5-106.5 (Jan and Mar 2023 highs). EURUSD – A potential bottom has developed on Dec 2022 downtrend breakout above 1.07. However, intermediate-term resistance remains at 1.09-1.11. USDJPY – A head and shoulders top remains. Neckline support is 126.36-127.49 (May 2022 and Jan 2023 lows). Left/right shoulders are 137.5-139.5 (Jul/Dec 2022 and Mar 2023 highs).


S&P 500 Sectors – RRG study shows a narrowing breadth from the previous week. Materials (XLB) and Industrial (XLI) weaken in the Weakening Quadrant. Financial (XLF) joins Energy (XLE), Consumer Staples (XLP), Healthcare (XLV), and Utilities (XLU) in the Lagging Quadrant. Consumer Discretionary (XLY) and Real Estate (XLRE) remain in the Imporving Quadrant, with XLRE nearing a move to the Lagging Quadrant. Technology (XLK) and Communication Services (XLC) remain entrenched in the Leading Quadrant.


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