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Technical Report for the Week of 12/5/22

Equities – SPX nears pivotal intermediate-term resistance at 4,105-4,219 or the top of the Jan/Mar 2022 downtrends, Jun, and Sept 2022 highs, the 50% retracement from the Jan-Oct 2022 decline, top of the Oct 2022 uptrend channel, and the 8/23/22 gap-down. A convincing breakout and surge above the 8/16/22 high (4,325.28) reverse a 1-year primary downtrend, confirms the 10/13/22 low as a market bottom, and reaffirm an intermediate-term rally. Initial support rises to 3,938.5-3,965, and below 3,906.5-3,912 and 3,807-3,860.

Fixed Income – The 10-year minus 3-mo yield spread continues to contract (-0.83) as it nears Jan 2001 extreme low (-0.95). Will it bounce? The 10-year minus 2-year continues to contract further, setting another chart low of -0.77 (Dec 2022). Will the next recession occur as early as Dec 2022-Feb 2023? TNX – Violation of the 50-day ma (3.896%) triggered a recent pullback to key support at 3.48-3.64% (Sept 2022 breakout, Oct 2022 low, Dec 2022 uptrend, and 38.2% retracement from the Aug-Oct rally). Initial resistance is 3.90-3.92%.

Commodities – CRB rebounds from key support at 261-264 (61.8% retracement from Dec 2021-Jun 2022 rally and the Sept 2022 low). Key initial resistance is 285.5-291 (Oct/Nov highs and the 200-day ma). WTI Crude rebounds from support at 73.60 (11/28/22 low). Initial resistance is 84.5 (50-day ma) and 93.64-94 (Oct/Nov highs). Gold rebounded from 1,618-1,622 (Sept/Oct/Nov 2022 lows). Resistance is 1,824-1,837 (Sept 2021 and Aug 2022 highs) and 1,879.5-1,882.5 (Nov 2021 and Jun 2022 highs).

Currencies – USD – Five negative outside days (9/28, 10/13, 10/21, 11/10, and 11/30/22) led to a recent correction to pivotal support at 104-105.5. Initial resistance is 109-110 (50-day ma). EURUSD – Five positive outside days ( 9/28, 10/13, 10/21, 11/10, and 11/30) led to recovery to key resistance at 1.035-1.037 and 1.06-1.0787. Initial support is 1.00-1.02. USDJPY – A negative outside day (10/21/22) triggered consolidation below support at 138-139 to 133-135 (200-day and 10-mo ma). Initial resistance is 137.5-140 (12/1/22 breakdown and 11/30/22 high).

S&P 500 Sectors – RRG study continues to strengthen from the previous week as six S&P sectors now reside in the Leading Quadrants. Consumer Staples (XLP) and Materials (XLB) join Healthcare (XLV), Financial (XLF), Industrials (XLI), and Energy (XLE) in the Leading Quadrant. Consumer Discretionary (XLY), Utilities (XLU), Communication Services (XLC), Technology (XLK), and Real Estate (XLRE) remain in the Lagging Quadrant. XLK and XLRE are improving, and XLY, XLU, and XLC are weakening.

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