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Technical Report for the Week of 07/25/22

Equities – SPX is confined to its Jan 2022 primary downtrend channel between 3,613 and 4,404. A recent breakout above the Apr 2022 downtrend (3,861), 50-day ma (3,919), and 6/28/22 high (3,945.86) suggest the 6/17/22 oversold rally can continue. Key initial resistance is the 6/10/22 gap-down (3,974-4,017), 38.2% retracement (4,019) from Mar-Jun 2022 decline, and the Mar 2022 downtrend at 4,038. Initial support rises to 3,919-3,946 (50-day ma and 7/20/22 breakout), 7/15/22 gap-up (3,796-3,817), and 3,721-3,752 (Jun 2022 uptrend and 7/14/22 low).

Fixed Income – The 10-year minus 3-mo yield spread violated pivotal support at 0.39-0.55. The breakdown warns of an inversion. Initial resistance is 0.39-0.43, 0.92-0.96, 1.29-1.4, 1.58-1.60. The 10-year minus 2-year spread inverted in Apr 2022 (-0.06) and Jul 2022 (-0.22). The second inversion warns of a US recession as early as Dec 2022 to Feb 2023. TNX has stalled at structural resistance near 3.04-3.25%. A h/s top warns of consolidation. Below neckline at 2.746% hints at a decline to 2.5%, 2.20%, 2.0%, and 1.85%.

Commodities – CRB - A negative outside month (Jun 2022) triggered a correction to 273.26 (7/15/22) or key support at 270-274 (200-day ma and 10-mo ma). Initial resistance is 287.04-287.78, 296.5-297, 303-304, 315.5-320.5, and 329.59. WTI Crude’s recent correction to 95.10 (7/6/22) rebounds from pivotal support at 89-94 (200-day/10-mo ma, 7/14/22 low, and 2020 uptrend). Initial resistance is 101-103, 109-111, and 114-116.5. Gold rebounds from intermediate-term support at 1,672-1,678 to initial resistance at 1,780-1,785/1,806-1,842.

Currencies – US Dollar breakout above 103.82-103.96 suggests 118.59-121.21. Support rises to 105-105.5, 104-104.5, 103-103.5, 101-101.5, 98.5-99. EURUSD broke neckline support at 1.0339-1.0456, leading to a decline to 0.9912 (7/14/22). Initial resistance is 1.035-1.0359, 1.046-1.05, 1.0601-1.0642, 1.0774-1.0807, 1.098-1.10. JPYUSD has broken 0.740 or the 2002 reaction low, suggesting a decline to retest 0.6784-0.6819. Initial resistance is 0.749-0.760, 0.7914-0.7995, 0.821-0.8595, and 0.8812-0.886.

S&P 500 Sectors – RRG study shows several sector rotations from the previous week. Healthcare (XLV) remains the only sector in the Leading Quadrant. Industrial (XLI), Consumer Staples (XLP), Materials (XLB), Utilities (XLU), and Energy (XLE) continue to weaken within the Weakening Quadrant. XLE retains oversold condition. Real Estate (XLRE) joins Financial (XLF) in the Lagging Quadrant. Consumer Discretionary (XLY) joins Technology (XLK) and Communication Services (XLC) in the Improving Quadrant.

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