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Technical Report for the Week of 04/25/22

Updated: Apr 25, 2022

Technical Summary

Equities – A negative outside day occurred on 4/21/22 for the S&P 500 Index (SPX). This is the fourth negative outside day in the past two weeks. Also, two gap-downs (4/6 and 4/11/22) occurred within the same timeframe. The failure to surpass the 200-day ma (4,497) warns of a retest of key support at 4,223-4,279 (Jul/Oct 2021 and 1/24/22 lows or neckline 1) and below this to 4,115-4,158 (2/24 and the 3/8/22 lows or neckline 2). Violation of neckline completes a h/s top breakdown and warns of the next SPX sell-off to 3,815 (38.2% retracement from the 3/23/20-1/4/22 rally). Key initial resistance is 4,370-4,406.5 (4/18/22 low and 50-day ma) and above this 4,495-4,513 (12/3/21 low, 200-day ma, and the 4/21/22 high).

Fixed Income – The 10-year minus 3-mo yield spread continues to expand, while the 10-year minus 2-year yield spread contracts. Above 1.71-1.73, renders 2.09, 2.32, 2.48, and 2.97. Initial support is 1.93, 1.75-1.76, 1.71-1.73, 1.50-1.56 and 1.40-1.45. The 10-year minus 2-year spread briefly inverted (-0.06) in early-Apr 2022. Does this imply the next US recession on Dec 2022-Feb 2023? TNX nears an inflection at structural resistance near 2.83-3.18% (top of 1980 downtrend channel) and 3.04-3.25% (2013/2018 highs).

Commodities – CRB can retest 321.5-326 (2012 highs) and 332-338 (61.8% retracement from 2008-2021 decline/Apr 2022 breakout target). An oversold condition suggests initial support at 303-304, 290-294, and 280.5. WTI Crude’s resistance is 116.64/130.50 (Mar highs) and 147.27 (2008 record high). Initial support is 98.44-99.88 (3/29 and 4/20 lows), 93-94 (Mar/Apr 2022 lows), and 85-87. Gold can rally to 2,079-2,089 (near-term) and 2,593-2,723 (long-term). Initial support is 1,935.5, 1,879.5-1,919, and 1,817-1,837.

Currencies – US Dollar has achieved several projections, including 100.41-100.61 and 100.97-101.14. The next resistance is 103.96 (3/23/20 high). Initial support is 99.56-99.81, 99.30-99.43, and 98.30. EURUSD nears support at 1.0727-1.0778 and 1.06-1.0636 (Mar 2020 lows). Initial resistance is 1.0936-1.0939, 1.1033 (50-day ma), and 1.1107-1.1184. JPYUSD remains in a significant sell-off. Next support is 0.740 (2002 low) and 0.6784 (1998 low). Resistance is 0.7995, 0.8245-0.833, 0.8596, and 0.875-0.8812.

S&P 500 Sectors – RRG study shows rotations continuing toward defensive and commodities sectors. Real Estate (XLRE), Industrial (XLI), Healthcare (XLV), Utilities (XLU), Consumer Staples (XLP), Energy (XLE), and Materials (XLB) remain in the Leading Quadrant. XLE continues to lose relative momentum, suggesting consolidation. Communication Services (XLC) is barely above the Improving Quadrant. Technology (XLK) and Consumer Discretionary (XLY) remain in the Lagging Quadrant. Financials (XLF) is close to slipping from Weakening to Lagging Quadrant.

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