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Technical Report for the Week of 06/08/20

Technical Summary:

Equities SPX declined 1,201.66 points or -35.41% during Feb-Mar 2020. Just as quickly as it has fallen to its 3/23/20 bottom 92,191.86) SPX has now regained 1,002.07 points or +45.72%. An uptrend channel over the past 2-months between 3,054 and 3,575 hints of the next rally toward the next resistance at 3,214.68 (1/31/20 low), and above this to 3,260-3,328.5 (2/24/20 gap down), and then to 3,393.52 (2/19/20 all-time high). Initial support rises to 3,129-3,164 (6/5/20 gap up), 3,081-3,099 and 3,054 (6/3/29 gap up and 3/23/20 uptrend), and then to 2,999-3,008 (5/29/20 low and the 200-day ma).

Fixed Income – US Treasury yields have rallied sharply from their respective March 2020 extreme lows and are now challenging key resistances. For instance, the 30-year Treasury yield (TYX) is testing major resistance at 1.80-1.90%. Key initial support rises to 1.35-1.45%, and below this to 1.25% and then to 1.13-1.19%. The 10-year Treasury yield (TNX) has broken out of a 3-month trading range (0.543-0.568% and 0.723-0.784%) during 6/4/20. This breakout suggests the next rally to 0.989% (38.2% retracement from Dec 2019-Mar 2020 decline). Key initial support is 0.723-0.784%, and below this to 0.543-0.568%.

Commodities – CRB Index founded key support at 101.48 (4/21/20). An oversold rally is now approaching medium-term resistance at 144.67 (50% retracement from Jan-Apr 2020 decline), and above this to major resistance at 155-160.5 (61.8% retracement, 200-day ma, and 10-mo ma). After a strong recovery, WTI Crude Oil is now testing major resistance at 41-43 or the Mar 2020 head/shoulders top breakdown, 61.8% retracement from the Jan-Apr 2020 decline, and the pivotal 30-wk ma. Gold is now consolidating its recent gains via a 3-mo triangle pattern between 1,666-1,672 and 1,776-1,789.

Currencies – Increased volatilities have returned to the currency markets as the US Dollar (USD) has violated its 200-day ma (98.37) as well as the bottom of the 2018 uptrend channel (97-98). This breakdown suggests a test of the next support at 96.02 (Dec 2019 low), and below this to 94-94.61. EURUSD has broken out above its 2-year downtrend channel at 1.10-1.11 and is now headed toward a key test of resistance near 1.14-1.1413. JPYUSD has violated its 50-day/200-day ma (0.929/0.923) and is now declining toward the next key support at 0.9071-0.9117 (Dec 2019 and Jan 2020 lows).

S&P 500 Sectors Technology (XLK) and Healthcare (XLV) and Consumer Staples (XLP) have quietly slipped into the Weakening Quadrant signaling corrections in both the XLK and the XLV sectors. Consumer Discretionary (XLY) and Communication Services (XLC) retain leadership roles within the Leading Quadrant. Industrial (XLI) and Financials (XLF) are improving near-term while Real Estate (XLRE) and Utilities (XLU) have weakened within the Lagging Quadrant. Energy (XLE) and Materials (XLB) remain within the Improving Quadrant. However, XLB appears well-positioned to moving into the Leading Quadrant over the near-term.

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