Technical Report for the Week of 04/04/22
Equities – The Mar 2022 oversold rally has led to 522.65- point gains or 12.70%. However, additional consolidation is required to confirm an SPX bottom. A choppy and volatile trading range is likely between 4,115-4,158 (Feb/Mar 2022 higher lows) and 4,818.62 (Jan 2022 all-time high). A broadening top/megaphone pattern has also developed. The formation is typically bearish. However, it can also be a continuation pattern. Above 5,156 confirms a breakout. Below 4,013, confirm a breakdown. On a near-term basis, watch for initial support to develop near 4,412-4,486, coinciding with the 50-day/200-day ma. The ability to find support helps to form an SPX bottom.
Fixed Income – The 10-year minus 3-mo yield spread continues to expand. Above 1.71-1.73 hints at 2.09 (Dec 2016 high). Support is 1.71-1.73, 1.62-1.65, 1.55-1.56, and 1.40-1.45. The long-end, medium, and short-end yields broke out earlier in the year, suggesting higher interest rates. Consolidations during Mar 2022 and subsequent breakouts hint at the next rallies. TNX is challenging the Jan 2022 breakout projection at 2.40-2.78%. Initial support is 2.25% (top of Jul 2021 channel) and 2.013-2.065% (3/11/22 gap-up and the 50-day ma).
Commodities – CRB is encountering key resistance at 313-326 (2012/2014 highs and top of 2020 uptrend channel). An overbought condition warns of consolidation to initial support at 277-280.5 and 247. WTI Crude Oil can retest 147.27/140 (Jul 2008 all-time daily/monthly high). An overbought condition warns at consolidation to supports at 98.5 (50-day ma), 93-93.5, and 85-87.5. Gold consolidates between 1,879.5.5-1,898 (50-day ma and Mid-Feb 2022 breakout) and 2,079-2,089 (2020/2022 highs).
Currencies – US Dollar continues to consolidate within a trading range between 97.36-97.43 (3/10, 3/17, and 3/30/22 lows) and 99.36-99.43 (Mar highs). EURUSD has rebounded from an oversold condition into a trading range between 1.0945-1.0901/1.0807 (Mar 2022 lows) and 1.1121-1.1138 (3/31/22 highs and 50-day ma). JPYUSD rebounds from key support at 0.795-0.805 (2007 and 2015 lows). A deeply oversold rally suggests initial resistance at 0.8245-0.83, and above this to 0.84 and 0.8556-0.8596.
S&P 500 Sectors – The RRG study shows minor changes for the past week. The rotations continue to favor the defensive and commodities sectors. Industrial (XLI), Healthcare (XLV), Financials (XLF), Utilities (XLU), Consumer Staples (XLP), Energy (XLE), and Materials (XLB) remain in the Leading Quadrant. Communication Services (XLC) slips back into the Lagging Quadrant, joining the improving Technology (XLK) and Consumer Discretionary (XLY) sectors. Real Estate (XLRE) improves in the Weakening Quadrant.
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