Equities – Critical SPX support is 3,810-3,837 (bottom of Jan 2022 downtrend channel, 38.2% retracement from Mar 2020-Jan 2022 rally, 61.8% retracement from Oct 2020-Jan 2022 rally, and 30-mo ma at 3,830). The ability to find support hints at a near-term bottom and the start of another SPX oversold rally. Initial resistance is 4,063-4,091 (5/2/22 low and 4/17/22 high) and above this 4,115-4,158 (38.2% retracement from 3/29-5/20/22 decline and 3/8/22 low), 4,248 (50% retracement), and 4,303-4,321 (5/4/22 high, 50-day ma, and 61.8% retracement).
Fixed Income – The 10-year minus 3-mo yield spread has diverged from the more popular 10-year minus 2-year yield spread. A rally toward 2.27 (4/6/22) prompted consolidation to the Mar 2022 breakout (1.71-1.73). The 10-year minus 2-year spread briefly inverted (-0.06) in early-Apr 2022. Does this imply the next US recession in Dec 2022-Feb 2023? TNX nears structural resistance at 3.0-3.25% (top of the 1980 downtrend and the 2013/2018 highs). Failure to breakout coupled with an oversold may lead to multi-year consolidation.
Commodities – CRB tests 313/321.5-326 (2012/2014 highs) and 332-338 (61.8% retracement from 2008-2021 decline). Initial support is 302.5, 293-297, 289, 280.5, 261-265.5, and 254-257.5. WTI Crude nears key resistance at 107-114/130.50 (2011/2013/Mar 2022 highs) and 147/140 (2008 record highs). Initial support is 103-105, 98-100, 93-95, and 86-87.5. Gold – Violation of key initial support at 1,833.5-1,879.5 led to a pullback to 1,785-1,795. Initial resistance is 1,854-1,879.5, 1,911-1,919, 1,963-1,966, 2,003, 2,079-2,089.
Currencies – US Dollar nears pivotal resistance at 105.65 (38.2% retracement from 1985-2008 decline). An oversold condition prompts consolidation to support at 102.38-102.69, 100.98-101.04, and 100.5. EURUSD tests neckline at 1.0339-1.0456. Violation warns of a major top. Initial resistance is 1.0636-1.0642, 1.0758-1.082, 1.0934-1.0936, 1.1121-1.129, and 1.1483-1.15. JPYUSD broke the neckline at 0.7946-0.8054. The next support is 0.740 (2002 low). Initial resistance is 0.7946-0.7995/0.855-0.866.
S&P 500 Sectors – RRG study shows rotations favoring select 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. XLB and XLP show strong relative price momentums. Communication Services (XLC) improves within the Improving Quadrant. Financials (XLF), Technology (XLK), and Consumer Discretionary (XLY) struggle within the Lagging Quadrant.
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