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Technical Report for the Week of 05/24/21

Technical Summary


Equities – The SPX Index continues with its Oct 2020 uptrend channel between 4,084 and 4,350. A convincing breakout above 4,219-4,238 (4/29 and 5/10/21 highs) would signal the next rally to 4,350 (top of the channel, near-term), and above this to 4,419 (4,238.04 breakout target, medium-term), and then 4,595 (Nov 2020 V-pattern breakout target, intermediate-term). Key initial support rises to 4,041-4,091 (50-day ma, May 2021 lows, bottom of Oct 2020 uptrend channel, and 38.2% retracement from Mar-May 2021 rally). Violation here warns of a deeper correction to 3,853.5-3,854.5 (38.2% retracement from Oct 2020-May 2021 rally and 3/25/21 low), and then 3,723-3,736 (3/4/21 low, 200-day ma, and 50% retracement).


Fixed Income – TYX and TNX continue to consolidate their gains via near-term consolidations. The trading range for TYX is between 2.210% and 2.476%. For TNX, it is between 1.53% and 1.746%. TYX and TNX have achieved their Aug 2020 uptrend channel breakout targets at 2.44-2.55% and 1.66-1.68%. Overbought conditions have led to the recent consolidations toward 2.16% and 1.471%. Will the consolidations via recent trading ranges alleviate overbought conditions and the resumption of primary uptrends?


Commodities – CRB Index has broken out above its critical 2018/2008 downtrends (177-178/197), suggesting a rally toward 215 (2011 downtrend). Initial support rises to 195-198 (Apr/May 2020 uptrend and 10-wk/50-day ma). WTI Crude continues to challenge key resistance at 65.5-66.5/68 (2019, 2020, and 2021 highs) and above this to 75-77 (2008 downtrend, late-2014). Initial support is 55-57.5 and then 50.5-50.75. Gold has broken out above its 9-mo downtrend channel between 1,610 and 1,855, suggesting the next Gold rally to 1,962.5-1,984 and then 2,089.20.


Currencies – US Dollar (USD) continues to weaken as a 5-mo head and shoulders top warns of a top. Below neckline support at 89.17-89.63 confirms a top. The key initial resistance is 91.5-92 (left and right shoulders and 50-day/200-day ma). EURUSD continues to strengthen further despite a 9-mo head and shoulders top. The key initial support is 91.5-92 (50-day and 200-day ma) and then 1.2349 (1/6/21 high). JPYUSD continues with a near-term technical basing pattern between 0.9103-0.9109 (6/5/20 and 5/13/21 lows) and 0.9304 (4/23/21 high).


S&P 500 Sectors – Sector rotations continue to show increasing market volatilities. Real Estate (XLRE), Industrials (XLI), and Material (XLB) remain in the Leading Quadrant. Financials (XLF), Communication Services (XLC), and Energy (XLE) continue to deteriorate further. Healthcare (XLV), Utilities, and Consumer Staples (XLP) continue to strengthen within the Improving Quadrant. Technology (XLK) and Consumer Discretionary (XLY) are beginning to improve within the Lagging Quadrant, with XLY moving closer to the Improving Quadrant.


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