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Technical Report for the Week of 06/05/23

Updated: Jun 5, 2023

Technical Summary

Equities – SPX – Recent breakout above 4,177.5-4,195.5 signals a rally to intermediate-term resistance at 4,307.5-4,325.44 (May and 8/16/22 reaction highs). Above 4,325.44 solidifies trend reversal and suggests 4,535-4,637, 4,818.62, and 5,159. Initial support is 4,232.5-4,241 (6/2/23 gap-up) and below 4,177.5-4,195.5 (6/1/23 breakout), 4,104-4,121.5 (50-day ma and 5/24/23 low). Secondary support is 4,048-4,049 (Apr/May 2023 lows), 3,975-3,991 (200-day ma), and 3,879 (Nov 2022 uptrend).

Fixed Income – TNX minus 3-month Treasury yield – The spread fell to -1.89 (5/4 and 6/1/23), prompting another oversold rally to key initial resistance at -1.64 to -1.32 (Jan 2023 lows and the 50-day ma), and -0.83 to -0.78 (Mar 2023 high and 200-day ma). Fed Funds and 2-year US Treasury yield – Both interest rates near their respective Feb 2007 and Jun 2006 peaks. The Fed is no longer behind the curve, suggesting the end of the tightening process is near. TNX – The Sept/Oct 2022 downtrend channel remains between 3.19% and 3.99%.

Commodities – CRB – A 1-year downtrend channel continues between 249 and 274. Initial support is 254-256.5 (Mar and May 2023 lows), and initial resistance is 265 (50-day ma) and 273-274 (200-day ma and downtrend). WTI Crude – The 2022 downtrend channel remains between 60 and 80. Initial resistance is 75-76.25 (50-day ma) and 79.5-81. Initial support is 67 and 62-64. Gold – After peaking at 2,085.40 (5/4/23), a high-level consolidation has developed between support at 1,936-1,975 and resistance at 2,002-2,015/2,078-2,085.

Currencies – USD – A 1-year h/s top with a neckline at 101.42/100.42-101.68 (May 2022 and Feb/Apr 2023 lows) remains. A positive outside day on 4/14/23 triggered an oversold rally toward 104.5-106. EURUSD – Dec 2022 downtrend breakout hint at a bottom. However, a negative outside day (4/14/23) warns of another consolidation to 1.0483-1.0524. USDJPY – Recent breakout above key resistances at 137-138 and 139.38-139.75 negate a head and shoulders top. Initial support rises to 137-138 (May 2023 breakout and 200-day ma).

S&P 500 Sectors – RRG study shows strengths concentrated in select sectors. Three sectors remain in the Leading Quadrant, including Consumer Discretionary (XLY), Technology (XLK), and Communication Services. Healthcare (XLV) is the only sector in the Improving Quadrant. Utilities (XLU) and Consumer Staples (XLP) join Materials (XLB), Real Estate (XLRE), Financial (XLF), Energy (XLE), and Industrials (XLI) in the Lagging Quadrant. XLF, XLE, XLB, and XLI show signs of stabilizing.

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