Energy and Financials nearing temporary resistance, but both groups bullish-1H 2022

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Key Takeaways

  • Bounce underway after having stabilized Monday, yet trends and momentum haven’t improved sufficiently after Tuesday to expect an immediate push to new highs.  As outlined in recent days, additional weakness is possible into late January.
  • Financials and Energy, the two main outperformers for 2022 thus far, are both nearing channel resistance, which makes keeping a close eye on these important.
  • Energy’s outperformance has been impressive thus far.  While near-term overdone, pullbacks in this group will create opportunities for buying dips into February.

S&P 500 hourly chart shows the bounce attempt Tuesday which should be nearing resistance in the next 24 hours.  Overall, it looks premature to bet on a move back to new highs just yet, but this bounce should find resistance between 4726-28 or above near 4758 before stalling out and turning down into late January.   While SPX looks to have a bit more upside on Wednesday, any decline back under 4638 would bring about a likely retest of Monday’s lows.  This area at 4582 will be very important to hold on any backing and filling.  Breaks of that level could bring about a decline that might surprise investors at a time when...

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