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Technical Report for the Week of 11/14/22

Equities – An SPX outside-year pattern has developed. The high/low are 4,818.62 and 3,491.5. A yearly close near the high confirms a bullish positive outside and the resumption of the May 2013 structural bull. A close near the low confirms a bearish negative outside year and warns of a bear/trading range. The 11/10/22 breakout above 3,907-3,912 (9/21 and 11/1/22 highs and the 50% retracement from Aug-Oct 2022 decline) suggests 4,007 (61.8% retracement) and 4,037-4,084 (200-day ma). Initial support is 3,907-3,912, 3,792-3,860, 3,698, and 3,637-3,654.

Fixed Income – The 10-year minus 3-mo yield spread continues to contract, setting a lower low at -0.17 (10/28/22). The next support is -0.52 to -0.64 (Feb 2007 and Aug 2019 lows). The 10-year minus 2-year also continues to contract to set a series of lower lows. However, the pace of the contraction has subsided, suggesting possible exhaustion. TNX breakout above 3.248-3.483% met target at 4.4-4.5% (top of 2021). An overbought condition hints at pullback to 3.81-3.91, 3.48-3.56, 3.25-3.35, 2.95, and 2.53-2.61%.

Commodities – CRB rebounds from key support at 261-264 (61.8% retracement from Dec 2021-Jun 2022 rally and the Sept 2022 low). Rally nears resistance at 285.5-290 (Oct/Nov highs/200-day ma). WTI Crude found pivotal support at 76.25 (9/26/22 low), prompting a recovery to key resistances at 93.64-93.74 (Oct/Nov highs) and 96.5-98.5 (10-mo/200-da ma). Gold rebounded from key support at 1,618-1,622 (Sept/Oct/Nov 2022 lows). The oversold rally nears key resistance at 1,769-1,807 (May 2022 low, 200-day ma, and 30-wk ma).

Currencies – USD – 4 negative outside days (9/28, 10/13, 10/21, and 11/10/22) and violations of 50-day ma and the Feb 2022 uptrend warn of consolidation toward 104.5-105 (200-day ma). EURUSD found support at 0.9330-0.9592 (May and Jun 2002 breakouts). Inside month (Oct 2022), breakouts above Feb 2022 downtrend and 50-day ma, and 4 positive outside days hint at an oversold rally to 1.035-1.0368/1.044. USDJPY – A negative outside day (10/21/22) warns of consolidation to key support at 139.5-141.5 and 131-134.

S&P 500 Sectors – RRG study shows similar rotations from the prior week. Healthcare (XLV), Financial (XLF), and Industrials (XLI) strengthen, and Energy (XLE) slows within the Leading Quadrant. Materials (XLB) improve within the Improving Quadrant. Consumer Discretionary (XLY) and Utilities (XLU) weaken, but Consumer Staples (XLP) strengthen in the Weakening Quadrant. Communication Services (XLC) struggles but Technology (XLK) and Real Estate (XLRE) bottom in the Lagging Quadrant.

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