Technical Report for the Week of 05/08/23
Equities – SPX– Despite the 27.54% bear decline last year the rebound from key support at 3,491.58 (10/13/22) or the middle of the 2009 structural uptrend channel (3,766) and 50% retracement (3,504) from the Mar 2020-Jan 2022 rally suggests the Jan-Oct 2022 selloff is a cyclical bear decline within a structural bull. Maintaining the 10-mo and 30-mo ma (3,979/4,140) suggests trading ranges between 3,750-3,800 and 4,325 (near-term), 3,500-3,600 and 4,650-4,800 (intermediate-term), and 3,000-3,200 and 5,400-5,600 (longer-term).
Fixed Income – TNX minus 3-month Treasury yield – When the spread expanded dramatically, this led to US recessions and SPX bear declines (2000-2002, 2007-2009, and Feb-Mar 2020). 2013 scenario resulted in neither a US recession nor an SPX bear decline. Is this a repeat of the former or the latter? TYX and TNX – Since peaking in Oct 2022, a divergence has developed as TYX shows higher lows and TNX shows lower lows. TNX – Recovery nears key initial resistance at 3.55-3.64% (50/200-day ma). Key support is 3.25-3.55%.
Commodities – CRB – Recent rally to 278.93 (4/18/23) stalled near pivotal resistance at 275.5-280 (200-day ma) prompting another pullback to pivotal support at 254.03 (3/15/23 low). Initial resistance is 265-268 (50-day ma and May highs). WTI Crude – The technical bounce from 63.57 (5/4/23 low) will encounter initial resistance at 75.5 (50-day ma) and 81-83/85.5 (200-day ma and Apr 2023 highs). Gold consolidates between 1,960-1,981 (Apr 2023 lows, 50-day ma and Mar 2023 breakout) and 2,079-2,085 (Mar 2022 and May 2023 highs).
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 toward 102-103 (50-day ma). 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 1.0735-1.083. 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 continues with a rotation into the defensive sectors. Six sectors remain in the Lagging Quadrant, including Materials (XLB), Real Estate (XLRE), Financial (XLF), Energy (XLE), Healthcare (XLV), and Industrials (XLI). XLE and XLV continue to improve. Utilities (XLU), Consumer Staples (XLP), and Consumer Discretionary (XLY) continue in the Improving Quadrant, with XLU and XLP strengthening. Technology (XLK) and Communication Services (XLC) weakened in the Leading Quadrant.
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