Technical Report for the Week of 06/07/21
Equities – The SPX Index continues with its Oct 2020 uptrend channel between 4,119 and 4,350-4,370. A breakout above 4,234-4,238 (May/Jun 2021 record highs) signals the next SPX rally to 4,350-4,370 (top of the channel, near-term), and above this to 4,419 (4,238.04 breakout target, medium-term), and 4,595 (Nov 2020 V-pattern breakout target, intermediate-term). Key initial support rises to 4,119-4,138 (50-day ma and the bottom of Oct 2020 uptrend channel), and 4,041-4,061 (May 2021 lows and 38.2% retracement from the Mar-May 2021 rally).
Fixed Income – TYX and TNX continue to consolidate their gains via trading ranges. For TYX, it 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%, respectively. Overbought conditions continue to warn of further consolidations over the near term. Key initial support is 2.137-2.161% (TYX) and 1.471-1.515% (TNX). Key initial resistance is 2.417-2.505% (TYX) and 1.765-1.780% (TNX).
Commodities – CRB Index has broken out above the 2018/2008 downtrends (176-177/197), suggesting a rally to 214-215 (2011 downtrend). Support is 198-202 (May 2021 lows, 50-day ma, and Apr 2020 uptrend). WTI Crude has broken out above key resistance at 65.65-66.60 (Apr 2020 and Jan 2021 highs). The breakout suggests the next WTI Crude rally to 75-77 (2008 downtrend). Support is 66-67, 61.5-64, 57-58, and then 52. Gold has broken out above its 9-mo downtrend channel between 1,598 and 1,845, suggesting the next rally to 1,962.5-1,984 and 2,089.20.
Currencies – US Dollar shows two conflicting patterns – a double bottom and a head/shoulders top. Key support is 89.17-89.63 (Jan/May 2021 lows). Key resistance is 91.09-91.69 (left/right shoulders and 50-day/200-day ma) and 93.47-94.79. EURUSD is consolidating between support at 1.198-1.204 (50-day and 200-day ma) and resistance at 1.2243-1.2266 (2/25 and 5/19/21 highs) and 1.2349 (1/6/21 high). JPYUSD shows a positive outside day on 6/5/21. However, a trading range continues between 0.9012-0.9103 (6/20/20 and 5/13/21 lows) and 0.9304 (4/23/21 high).
S&P 500 Sectors – Sector rotations continue to show the weak sectors weakening and the strong sectors strengthening. Real Estate (XLRE), Industrials (XLI), and Material (XLB) remain in the Leading Quadrant. However, XLI may soon slip into the Weakening Quadrant. Financials (XLF), Communication Services (XLC), and Energy (XLE) remain in the Weakening Quadrant with XLC bottoming. Healthcare (XLV), Utilities (XLU), and Consumer Staples (XLP) continue to reside within the Improving Quadrant, with XLV gaining strength. Technology (XLK) and Consumer Discretionary (XLY) continue to improve within the Lagging Quadrant.
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