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Technical Report for the Week of 04/03/23

Technical Summary

Equities – SPX – Two conflicting patterns set the stage for a pivotal battle between the bulls and bears. One is a bearish formation of the Nov 2022 head and shoulders top and the other is a bullish May 2022 head and shoulders bottom. Above 4,101-4,150 and preferably 4,195.44 (2/2/23 high and head) negates a head/shoulders top. Above 4,308-4,325 (neckline) confirms a head/shoulders bottom breakout. Pivotal support is 3,935.5-4,021 (50-day/200-day ma) and 4,764.5-4,809 (Dec 2022 and Mar 2023 lows).

Fixed Income – TYX (monthly) – Above 3.0% and 3.455% (2018 high) confirms structural breakout. A 3/2/23 island reversal warns consolidation to 3.413-3.64% (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 3.64-3.67% (50-day and 3/22/23 high).

Commodities – CRB – 2022 downtrend channel remains at 249-250 (support) and 269-274 (resistance). An oversold rally nears resistance at 269-274 (50-day ma and top of 2022 downtrend channel). WTI Crude – The ability to find support at 64.36 (Aug/Dec 2022 lows and the bottom of 2022 downtrend channel) suggests a rebound to resistance at 76-78 (top 2022 downtrend channel and 50-day ma). The gold breakout above resistance at 1,960-2,003 (Mar 2022 downtrend and Apr 2022/Feb 2023 highs) renders 2,079 (3/8/22 high).

Currencies – USD – A 1-year head/shoulders top remains intact. Neckline support is 100.68-101.42 (May 2022 and Feb/Mar 2023 lows). The right shoulders are 105.5-106.5 (Jan and Mar 2023 highs). EURUSD – A bottom has developed on Dec 2022 via a downtrend breakout above 1.07. Above, 1.09-1.11 reaffirms the breakout. 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 – The RRG study shows similar rotations from the previous week. Materials (XLB) and Industrial (XLI) weaken in the Weakening Quadrant. Real Estate (XLRE) joins Financial (XLF), Energy (XLE), Consumer Staples (XLP), Healthcare (XLV), and Utilities (XLU) in the Lagging Quadrant. XLP, XLV, and XLU may be bottoming with rising momentum. Consumer Discretionary (XLY) improves in the Improving Quadrant. Technology (XLK) and Communication Services (XLC) remain in the Leading Quadrant.

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