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Technical Report for the Week of 04/19/21

Equities – The recent 4/5/21 gap-up breakout suggests the next SPX rally to 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 during the second half of the year, a near-term overbought condition is likely to develop. Initial support rises to 4,158 (top of the Nov 2020 uptrend channel), and below this to 4,020-4,034 (extension of the recent 2-mo breakout and 4/5/21 gap-up), 3,905-3,950.5 (bottom of the Nov 2020 uptrend channel and 50-day ma), 3,853.5 (3/25/21 low), and 3,695-3,723 (Jan and Mar 2021 lows).

Fixed Income – The 30-year Treasury yields (TYX) have recently achieved their 2019 highs (2.46%), while TNX has yet to trade to its 2019 highs at 1.934-1.943%. What does this divergence mean? TYX and TNX have both achieved their Aug 2020 uptrend channel breakout targets at 2.44-2.55% (TYX) and 1.66-1.68%, respectively. Overbought conditions have prompted the recent consolidations. Violations of the top of their recent channel breakouts (2.34% and 1.608%) warn of tests of their 50-day ma at 2.25% and 1.51%, respectively.

Commodities – CRB Index is testing 197 or the 2008 downtrend and 204-207 (2008 highs and the 38.2% retracement from 2011-2020 decline). A breakout would reverse a structural downtrend. The key initial support is 187-189 (50-day ma) and 183-184. WTI Crude’s rally achieved its key resistance at 65.65-66.60, prompting the recent consolidation to initial support at 56.5-57.5 (Mar/Apr 2021 lows and 2018 downtrend). Gold is rebounding from key support at 1,751.5-1,761 (Mar 2021 highs and 50-day ma) to key resistance at 1,858-1,885 (200-day ma).

Currencies – US Dollar (USD) achieved its target of 92.5-93.5. An overbought condition has led to consolidation toward key initial support at 91.5 (50-day ma and the 3/4/21 breakout). EURUSD has rebounded from key support at 1.17-1.1769. An oversold rally is now testing key initial resistance at 1.197-1.2012 (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 0.928/0.946.

S&P 500 Sectors – Sector rotations show a slight bullish tilt as 7 S&P sectors now reside in the Improving and Leading Quadrants and 4 S&P sectors in the Weakening and Lagging Quadrants. Materials (XLB) joins Industrials (XLI), Communications (XLC), Energy (XLE), and Financials (XLF) within the Leading Quadrant. Consumer Staples (XLP) and Real Estate (XLRE) remain in the Improving Quadrant, with XLRE close to entering the Leading Quadrant. Healthcare (XLV), Utilities (XLU), Consumer Discretionary (XLY), and Technology (XLK) reside within the Lagging Quadrant. XLV and XLY are showing signs of bottoming, and XLU is improving.

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