Technical Report for the Week of 11/21/22
Equities – A 1-year SPX primary downtrend channel remains between 3,304 and 4,161. The 10/13/22 oversold rally nears key resistance at 4,067-4,177.5 or the 200-day ma, top of the Jan 2022 primary downtrend channel, and the 6/2 and 9/12/22 highs. A breakout can lead to a retest of 4,325 (Aug 2022 high). On a shorter-term basis, a 2-month uptrend channel has also developed between 3,843 and 4,120. Initial support rises to 3,818-3,860 (bottom of 2-month uptrend channel and 11/10/22 gap-up) and below this 3,790 (50-day ma).
Fixed Income – The 10-year minus 3-mo yield spread contracted further to a low of -0.65 (11/16/22) or near key support at -0.52 to -0.64 (Feb 2007 and Aug 2019 lows). The 10-year minus 2-year continues to contract further, setting another chart low of -0.69 (Nov 2022). TNX breakout above 3.248-3.483% met target at 4.4-4.5% (top of 2021 uptrend channel). An overbought condition triggered a recent pullback to key support at 3.48-3.64% (Sept 2022 breakout, Oct 2022 low, and the 38.2% retracement from the Aug-Oct 2022 rally).
Commodities – CRB rebounds from key support at 261-264 (61.8% retracement from Dec 2021-Jun 2022 rally and the Sept 2022 low). Recovery stalls near initial resistance at 285.5-290.5 (Oct/Nov highs/200-day ma). WTI Crude found pivotal support at 76.25 (9/26/22 low), prompting a recovery that stalled at initial resistance near 93.64-93.74 (Oct/Nov highs). Gold rebounded from key support at 1,618-1,622 (Sept/Oct/Nov 2022 lows). The oversold rally encounters key initial resistance at 1,763-1,806 (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) triggered a correction to key support at 104-105 (pivotal June 2022 breakout and the 10-mo/200-day ma). EURUSD – An inside month (Oct 2022) and 4 positive outside days ( 9/28, 10/13, 10/21, and 11/10/22) triggered an oversold rally to key resistance at 1.035-1.0368/1.043. USDJPY – An extremely overbought condition and a negative outside day (10/21/22) trigger a consolidation. Key support is 138-139 and below this to 133-134 (200-day and 10-mo ma).
S&P 500 Sectors – RRG study shows improvements from the previous week as six S&P sectors reside in the Leading and Improving Quadrants. Consumer Staples (XLP) joins Healthcare (XLV), Financial (XLF), Industrials (XLI), and Energy (XLE) in the Leading Quadrant. Materials (XLB) strengthens within the Improving Quadrant as it nears the Leading Quadrant. Consumer Discretionary (XLY) and Utilities (XLU) join Communication Services (XLC), Technology (XLK), and Real Estate (XLRE) in the Lagging Quadrant.
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