Equities – SPX – The 6/1/23 breakout above 4,177.5-4,195.5 and 4,325.28 (8/16/22 reaction high) confirms an intermediate-term trend reversal and signals an SPX rally toward 4,535-4,637 and above this 4,744, 4,818.62, and then 5,159. June 2023 rally to 4,448.47 (5/16/23 high) led to an overbought condition prompting a near-term consolidation toward initial support at 4,307-4,325 (6/12/23 breakout) and below this 4,232.5-4,241 (6/2/23 gap-up), 4,177.5-4,195.5 (6/1/23 breakout and 50-day ma), and 4,104 (5/24/23 low).
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 -1.69 to -1.32 (Jan 2023 lows and the 50-day ma), and -0.91 to -0.83 (Mar 2023 high and 200-day ma). Fed Funds and 2-year US Treasury yield near their respective Feb 2007 and Jun 2006 peaks. The Fed is no longer behind the curve, suggesting 2 more hikes totaling 50bps may end the Fed tightening process. TNX – The Sept/Oct 2022 downtrend channel remains intact between 3.16% and 3.91%.
Commodities – CRB – A 1-year downtrend channel remains between 247 and 272. Initial support is 254-256.5 (Mar and May 2023 lows), and initial resistance is 264 (50-day ma) and 271 (200-day ma). WTI Crude – The 2022 downtrend channel remains between 58.5 and 78. Initial resistance is 73-76 (50-day ma) and 78-81/83.5-85.5. Initial support is 67 and below this 62-64 and 58.5. Gold – After peaking at 2,085.40 (5/4/23), correction nears key support at 1,930 (extension of the Mar 2002 downtrend). Initial resistance is 1,975-2,003 (50-day ma).
Currencies – USD – A 1-year h/s top with a neckline at 101.42/100.42-101.68 (May 2022, Feb, Apr, and Jun 2023 lows). Resistance is 104.5-106 (200-day ma and Mar and May 2023 highs). EURUSD – Dec 2022 downtrend breakout hint at a bottom. The 4/14/23 negative outside day suggests a near-term consolidation to 1.0483-1.055 (Mar/May 2023 lows/200-day ma). USDJPY – Breakouts above key resistances at 137-138, 139.38-139.75, and 142.60 negate a H/S top suggesting a rally to 145.90 (Sept 2022 highs). Key support is 137-138.
S&P 500 Sectors – RRG study shows strengths concentrated in three sectors. Two sectors remain in the Leading Quadrant, including Consumer Discretionary (XLY) and Technology (XLK). Communication Services (XLC) has slipped into the Weakening Quadrant. Financial (XLF) moved into the Improving Quadrant. Healthcare (XLV) joins Utilities (XLU), Consumer Staples (XLP), Materials (XLB), Real Estate (XLRE), Energy (XLE), and Industrials (XLI) in the Lagging Quadrant. XLRE, XLB, XLI, and XLI are showing signs of improvement.
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