Technical Report for the Week of 04/12/21
Technical Summary
Equities – The recent 4/5/21 gap-up breakout suggests an SPX rally toward 4,136-4,177.5, coinciding with the 161.8 Fibonacci Projection and the recent 2-mo breakout target. Although higher prices to 4,595 are possible, an overbought condition (RSI is 72.17) may develop into this rally. Initial trading support rises to as high as 4,014-4,045 (4/5/21 gap-up and the top of the Nov 2020 uptrend channel breakout), and below this to 3,950-3,984 (Mar 2021 triangle breakout), 3,914 (50-day ma), 3,853.50 (3/25/21 reaction low), and then to 3,787-3,818 (bottom of the Nov 2020 uptrend channel). Violation here warns of a deeper correction to 3,694-3,723 (1/29 and 3/4/21 lows), and then 3,577.70 (200-day ma).
Fixed Income – Since Aug 2020, the 10-year (TNX) and 30-year treasury yields (TYX) have both rallied toward their respective Sep, Nov, and Dec 2019 reaction highs at 1.903%, 1.943%, and 1.935% (TNX), and 2.378%, 2.427%, and 2.389% (TYX). TYX has recently achieved its 2019 highs (2.46%). Will TNX also trade to its 2019 highs at 1.934-1.943%? TYX and TNX have achieved their Aug 2020 uptrend channel breakouts at 2.44-2.55% (TYX) and 1.66-1.68%. Initial supports are 2.208-2.32% and 1.915-1.992% (TYX) and 1.458-1.608%, 1.187-1.22%, and 0.952-1.001 (TNX).
Commodities – CRB Index still can rally to 202-207 (2008 highs) and then to 217.5 (2011 downtrend). However, an overbought condition warns of consolidation to key support at 185-188. WTI Crude has stalled near the key resistance at 65.65-66.60, prompting the recent consolidation to initial support at 56.5-57.5 (Mar/Apr 2021 lows and extension of the 2018 downtrend). Gold is encountering key initial resistance at 1,754-1,761 (Mar 2021 highs and 50-day ma). Key initial support remains at 1,666-1,695 (bottom of 2020 downtrend).
Currencies – US Dollar (USD) achieved its target of 92.5-93.5. An overbought condition warns of a near-term consolidation toward key initial support at 91.5 (50-day ma and 3/4/21 breakout). EURUSD has rebounded from key support at 1.17-1.1769. An oversold rally is now nearing key initial resistance at 1.198-1.2125 (left/right shoulders and the 50-day ma). JPYUSD has rebounded from key support at 0.90-0.9103 (6/5/20 low and 2019 trendline), prompting an oversold rally toward key initial resistance at 0.9225-0.9230, and above this to 0.9311-0.946.
S&P 500 Sectors – In the past eight weeks ending on April 5, 2021, sector rotations show mixed readings with 6 S&P sectors residing in the Improving and Leading Quadrants and 5 S&P sectors in the Weakening and Lagging Quadrants. Industrials (XLI) and Communications (XLC) have strengthened, while Energy (XLE) and Financials (XLF) have weakened within the Leading Quadrant. Healthcare (XLV), Utilities (XLU), Consumer Discretionary (XLY), and Technology (XLK) remain within the Lagging Quadrant. Materials (XLB) is close to moving from Weakening to Leading Quadrant. Consumer Staples (XLP) and Real Estate (XLRE) continue to improve within the Improving Quadrant.
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