Equities – The 13-day 7.74% SPX oversold rally from 6/17/22 low (3,636.87) nears key initial resistance at 3,946-4,017 (50-day ma, 6/10/22 gap-down, 6/28/22 high, and the 61.8% retracement from Jun 2022 decline). Initial support is 3,708-3,738.5 (6/21/22 gap-up and 6/30/22 low) and 3,606-3,637 (6/17/22 low and bottom of Mar 2022 downtrend channel). Another mid-term election year cycle bottom is likely during the second half. If the current January market decline is a cyclical bear, then SPX should maintain its long-term support at 3,200-3,600.
Fixed Income – The 10-year minus 3-mo yield spread has contracted to 0.92 or the 50% retracement (0.88) from the 2019-2022 rally. Initial resistance is 1.29-1.40 and 1.62-1.70. The 10-year minus 2-year spread inverted in Apr 2022 (-0.06) and Jul 2022 (-0.04). A second inversion warns of a US recession as early as Dec 2022-Feb 2023. TNX may have stalled at structural resistance (3.04-3.25%). An overbought condition and a near-term head/shoulders top hint at a consolidation. Below 2.7-2.75%, suggests 2.4-2.45% and then 1.8%.
Commodities – CRB has corrected 16.22% to 276.13 (7/16/22) as it rebounds from key support at 266-273 (200-day ma and 10-mo ma). Initial resistance is 296.5-297, 315.5-320.5, and 329.59. WTI Crude can still rally to 130.50 (3/7/22 high), 147/140 (2008 record highs), and 161-167 (top of 2020 uptrend channel). Recent correction to 95.10 (7/6/22) nears key support at 92.75-94 (200-day/10-mo ma and Mar/Apr lows). Gold nears key support at 1,721-1,753/1,672-1,678. Initial resistance is 1,780-1,785 and 1,837.5-1,844.
Currencies – US Dollar breakout above 103.82-103.96 suggests 107-108.5, 118-118.5, and 120-121. Support rises to105-105.5, 102.5-104, and 99.5-101.5. EURUSD broke neckline support at 1.0339-1.0456, suggesting a decline to 1.0112-1.0209 and 0.9592. Initial resistance falls to 1.054-1.0615, 1.0787-1.0807, 1.0934-1.097, and 1.107-1.1184. JPYUSD has broken 0.740 or the 2002 reaction low, suggesting a decline to 0.6784-0.6819. Initial resistance is 0.758-0.7619, 0.7914-0.7995, 0.821-0.8595, and 0.8812-0.8886.
S&P 500 Sectors – RRG study shows significant rotations. Only Healthcare (XLV) remains within the Leading Quadrant. Industrial (XLI), Real Estate (XLRE), Consumer Staples (XLP), Materials (XLB), Utilities (XLU), and Energy (XLE) have all entered the Weakening Quadrant. Financials (XLF) and Consumer Discretionary (XLY) remain in the Lagging Quadrant, with XLY deteriorating and Financials improving. Technology (XLK) and Communication Services (XLC) improve within the Improving Quadrant.
To view the entire report go to the Reports tab on the website or click the following: