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Technical Report for the Week of 05/01/23

Equities – SPX – Since the 10/13/22 low at 3,491.58, SPX has experienced three rallies and two corrections. The violations of the short-term uptrends triggered the respective SPX corrections. The third SPX rally from the 3/13/23 low (3,808.86) nears key resistance at 4,169.5-4,195.5 (2/2 and 4/18/23 highs). A breakout suggests 386.59 points and the next rally to 4,325.28 (8/16/22 reaction high) and 4,582 (breakout target). Initial support rises to 4,032-4,033.5 (50-day ma) and below this 3,947-3,993.5 (200-day ma).

Fixed Income – TYX (monthly) – Above 3.0-3.02% and 3.445% (2018 high) confirms a structural breakout. A 3/2/23 island reversal warns of consolidation to 3.41-3.70% (200-day ma). TNX (monthly) – Breakout above 3.036-3.248% suggests a structural breakout. A negative outside month (Mar 2023) still warns of consolidation to 3.036-3.248%. TNX (daily) – Since the Oct 2022 top (4.333%), a downtrend channel has developed between 3.17-3.25% and 3.987-4.09%. Initial resistance is 3.54-3.64% (50-day and 200-day ma).

Commodities – CRB – Breakout above 272-275 (2022 downtrend) led to a rally to 278.93 (4/19/23), stalling near the key resistance at 276-280 (200-day ma). Initial support is 263.5-265 (Sept 2022 and Jan/Apr 2023 lows). WTI Crude – The recovery from 64.36 (Aug/Dec 2022 lows and the bottom of the 2022 downtrend channel) stalled at 83.5 (200-day ma). Initial support is 70-72.5 (Dec 2022 and Jan/Feb 2023 lows). Gold stalled at 2,063.40 (4/13/23) or below 2,078.80 (3/8/22 reaction high). Initial support is 1,960-1,975/1,919-1,942.

Currencies – USD – A 1-year h/s top with a neckline at 100.42-101.68 (May 2022 and Feb/Apr 2023 lows). Positive outside day on 4/14/23 hints at an oversold rally to 102.5-103 and above 105-106. EURUSD – Dec 2022 downtrend breakout and golden cross buy signal hint at a bottom. A negative outside day on 4/14/23 warns at consolidation to 1.0787-1.08. USDJPY – A head and shoulders top with the neckline at 126.36-127.49 (May 2022 and Jan 2023 lows). An oversold rally nears pivotal resistance at 137-138 (200-day ma and right shoulder).

S&P 500 Sectors – RRG study favors rotation into the defensive sectors. Six sectors reside in the Lagging Quadrant, including Materials (XLB), Real Estate (XLRE), Financial (XLF), Energy (XLE), Healthcare (XLV), and Industrials (XLI). XLE, XLV, and XLB continue to improve. Utilities (XLU) and Consumer Staples join Consumer Discretionary (XLY) in the Improving Quadrant, with XLY dramatically weakening. Technology (XLK) and Communication Services (XLC) continue to weaken in the Leading Quadrant.

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