Equities – Recent oversold rally failed at 4,307.66 (5/4/22) or below its 50-day ma (4,369.70) and 200-day ma (4,489.10). Critical support is 4,057-4,115 (5/12/21 and 2/24/22 lows). A breakdown warns of a major top and the next SPX sell-off to 3,815-3,950 (38.2% retracement from the 3/23/20-1/4/22 rally and Mar 2021 breakout) and 3,505-3,650 (50% retracement and Nov 2020 breakout). Initial resistance is 4,307.5-4,308.5 (4/28 and 5/4/22 highs), 4,370-4,417 (50-day ma and 3/3/22 high), and 4,489-4,513 (200-day ma, 12/3/21 low and 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 2.32, 2.48, and 2.97. Will the reverse direction at 2.97 prompt the resumption of the 2013 SPX structural bull? 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 point as it challenges structural resistance at 3.0-3.25% (top of the 1980 downtrend channel and the 2013/2018 highs).
Commodities – CRB challenges next key resistance at 313/321.5-326 (2012/2014 highs) and 332-338 (61.8% retracement from 2008-2021 decline). Initial support is 298.5-299, 293.14, and 280.57. WTI Crude nears key resistance at 107-114/130.50 (2011/2013/Mar intra-month 2022 highs) and 147/140 (2008 record high). Initial support is 104.59, 99-100, 94-95.5, and 85-87.5. Gold can retest 2,003 (near-term), 2,078-2,089 (medium-term), and 2,593-2,723 (long-term). Initial support is 1,836-1,879.5, 1,796-1,812 and 1,721-1,753.
Currencies – US Dollar tests pivotal resistance at 103.96 (Mar 2020 high). A breakout suggests the next USD rally to 105.65 (39.2% retracement from Feb 1985-Mar 2008 decline). Initial support rises to 101.34-102.38, 99.43-99.81, and 97-97.74. EURUSD nears neckline support at 1.0339-1.0456. Violation warns of a major top. Initial resistance is 1.0936-1.0939, 1.1033 (50-day ma), and 1.1107-1.1184. JPYUSD has confirmed a top below the neckline at 0.7946-0.8054. Next support is 0.740 (2002 low) and 0.6784 (1998 low).
S&P 500 Sectors – Rotations continue to favor 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. XLU, XLB, and XLB show strong relative momentum. Communication Services (XLC) remains in the Improving Quadrant. Financials (XLF) joins Technology (XLK) and Consumer Discretionary (XLY) in the Lagging Quadrant, with XLK and XLY improving relative momentum.
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