Technical Report for the Week of 05/03/21

Technical Summary

Equities – SPX may be peaking near term as it challenges the top of its Nov 2020 uptrend channel (4,200). Although higher prices are possible to 4,280 (top of the Mar 2021 uptrend channel, near-term), and above to 4,473 (Mar 2021 channel breakout target, medium-term) and then 4,595 (Nov 2020 V-pattern breakout target, intermediate-term), an overbought condition warns of consolidation. Initial support is 4,087-4,118 (bottom of Mar 2021 uptrend channel and 4/20/21 low), and below this to 4,003-4,010 (bottom of Nov 2020 channel and 50-day ma) and then 3,960.

Fixed Income – The 30-year Treasury yields (TYX) have achieved the late-2019 reaction highs (2.46%), while 10-year yields (TNX) rallied to 1.765%, just shy of the late-2019 reaction highs (1.934-1.943%). TYX and TNX have achieved their Aug 2020 uptrend channel breakout targets at 2.44-2.55% and 1.66-1.68%. Near-term overbought conditions have promptly led to consolidations to 2.207% and 1.529%. Did the recent pullbacks alleviate overbought conditions allowing for the resumptions of their respective Aug 2020 uptrends?

Commodities – CRB Index has broken out above its critical 2018/2008 downtrends (176-177/197), suggesting the next rally to 206.95 (May 2018 high), and then 213-216 (2011 downtrend). The key initial support is 195-196, 191, and then 183-185. WTI Crude is testing key resistance 66.5-68 (2019, 2020, and 2021 highs). Above this to 76-77 (2008 downtrend). Initial support is 60-62 (50-day ma) and 57-58. Gold is testing key initial support at 1,745-1,754 (50-day ma and 4/8/21 breakout). Initial resistance is 1,798.40 and 1,858-1,871 (200-day ma).

Currencies – US Dollar (USD) continues with its bottom via a third higher low pattern (1/26, 2/25, and 4/29/21 at 89.17, 89.68, and 90.39). However, a 4-mo head and shoulders top warn of near-term weakness. EURUSD is displaying a 9-mo head/shoulders top pattern. The head is 1.2349, and the left and right shoulders are 1.2012/1.215-1.2243. Below the neckline at 1.1605-1.1703 confirms the breakdown. JPYUSD may have peaked at 0.9304 or near its 38.2% retracement. The recent decline is retesting 0.9103 (Jun 2020 low). Below this renders downside to 0.9012 (3/31/21 low).

S&P 500 Sectors – In the past eight weeks ending on April 26, 2021, sector rotations continue to favor the bulls as 7 S&P sectors reside in the Improving and Leading Quadrants. 4 S&P sectors remain in the Weakening and Lagging Quadrants. Real Estate (XLRE) now joins Industrials (XLI), Communications (XLC), Material (XLB), and Financials (XLF) in the Leading Quadrant. Energy (XLE) slips into the Weakening Quadrant. Utilities join Consumer Staples (XL) in the Improving Quadrant. Healthcare (XLV), Technology (XLK), and Consumer Discretionary (XLY) continue to consolidate within the Lagging Quadrant.

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