Technical Report for the Week of 08/01/22
Equities –SPX retains its Jan 2022 primary downtrend channel between 3,615 and 4,385. The 6/17/22 oversold nears secondary resistance at 4,137-4,177.5 (6/2/22 high and the 50% retracement from Mar-Jun 2022 decline) and then 4,225 (the 7/20/22 breakout target and 61.8% retracement). Intermediate-term resistance remains at 4,346-4,385 (200-day ma and top of Jan 2022 downtrend channel). Initial support is 3,921-3,946 (50-day ma and the 7/20/22 breakout), 3,796-3,817 (7/15/22 gap-up), and 3,721.5-3,775 (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 impending inversion. Initial resistance is 0.39-0.43, 0.92-0.96, 1.29-1.4, 1.55-1.60. 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 at 3.04-3.25%. A head/shoulders top breakdown below neckline at 2.746% signals a decline to 2.58%, 2.23%, 2.0%, and 1.87%.
Commodities – A negative outside month (Jun 2022) in CRB led to a correction toward 273.26 (7/15/22) or near 271.5-275 (200-day ma and 10-mo ma). Initial resistance is 296.5-297, 302-305, 315.5-320.5, 329.59. WTI Crude’s recent correction to 90.56 (7/14/22) found pivotal support at 90-94 (200-day/10-mo ma, 7/14/22 low, and 2020 uptrend). Initial resistance is 101-103, 105-107.5, and 114-116.5. Gold rebounds from intermediate-term support at 1,672-1,678 (Jun 2020, 2021, and Jul 2022 lows). Initial resistance is 1,780-1,785 and 1,798-1,801.
Currencies – US Dollar breakout above 103.82-103.96 still suggests 118.59-121.21. The pullback nears key initial support at 105-105.5 (May and Jun 2022 highs). EURUSD broke neckline support at 1.0339-1.0456 and a decline to 0.9912 (7/14/22 low). An oversold condition hints at a rally to initial resistance 1.035-1.0359 and 1.046-1.05. JPYUSD’s breakdown below 0.740 (2002 low) still suggests a downside target at 0.6784-0.6819. An oversold rally hints at initial resistance near 0.7605-0.7613 and above this to 0.7914-0.7995.
S&P 500 Sectors – RRG study shows another sector weakening. Healthcare (XLV), a prior Leading Quadrant sector that has slipped into the Weakening Quadrant, joining Industrial (XLI), Consumer Staples (XLP), Materials (XLB), Utilities (XLU), and Energy (XLE). Real Estate (XLRE) and Financial (XLF) remain in the Lagging Quadrant. Consumer Discretionary (XLY), Technology (XLK), and Communication Services (XLC) continue in the Improving Quadrant, with XLK and XLY strengthening.
To view the entire report go to the Reports tab on the website or click the following: