Technical Report for the Week of 06/28/21

Technical Summary

Equities – The SPX Index retains the November 2020 uptrend channel between 4,191 and 4,440-4,464. A breakout above 4,238-4,257 (May/Jun 2021 record highs) suggests targets to 4,440-4,464 (top of the channel, near-term), 4,419-4,438 (breakout target, medium-term), and then 4,595-4,737 (V-pattern and channel breakout targets, medium-term). Initial support rises to 4,238-4,257 (6/24/21 breakout), and below this to 4,164-4,191 (6/3/21 low, 50-day ma, and bottom of Oct 2020 uptrend channel) and then 4,040-4,061 (May 2021 lows and the 38.2% retracement from the Mar-May 2021).

Fixed Income – In 3 prior steepening of the US yield curve, two occurrences led to major U.S. recessions/SPX bear declines (2000-2002 and 2007-2009). However, the third occurrence (2013) resulted in neither a US recession nor an SPX bear decline. TYX and TNX continue to diverge – both on the rallies earlier in the year and the recent corrections. For instance, TYX has convincingly violated its May 2021 low (2.161%), while TYX still maintains above the May/Jun 2021 lows (1.438-1.471%). Initial resistance is 2.254% (TYX) and 1.574-1.594% (TNX).

Commodities – CRB Index’s next key resistance is 215 (2011 downtrend), and above this to 233.5/244-245. Initial support rises to 204.5 (50-day ma), and below this to 192-196. WTI Crude Oil tests major resistance at 75-77 (2008 downtrend, Oct 2018 highs, and the 50% retracement from Jun 2008-Apr 2020 decline). Initial support rises to 67-68, 60.5-61.5, 57-59/55, and 54. Gold’s bearish flag/pennant pattern warns of further volatility. Below 1,754-1,761 confirms a breakdown. Key initial resistance is 1,833-1,838 (50-day/200-day ma).

Currencies – US Dollar remains volatile as it attempts to negate a 6-month head/shoulders top. However, there remains formidable resistance at 92/39-93.47 and 94.33-94.82. Initial support is 90.67-91.56 (50-day/200-day ma). EURUSD continues with its 10-mo head and shoulders top as it struggles to clear above key resistance at 1.2243-1.2266 and 1.2349. Key support is 1.1605-1.1703 (11/4/20 and 3/31/21 lows). JPYUSD is testing key support at 0.9000-0.9012 (Mar/Jun 2021 lows). Key initial resistance is 0.915 (50-day ma) and 0.9304 (4/21 highs).

S&P 500 Sectors – RRG sector rotations show minor changes from the prior week. Real Estate (XLRE) and Material (XLB) remain in the Leading Quadrant, with XLB weakening further and XLRE maintaining leadership. Industrials (XLI), Financials (XLF), Communication Services (XLC), and Energy (XLE) remain in the Weakening Quadrant. XLI has weakened, but XLC has strengthened, and XLE improved. Healthcare (XLV), Utilities (XLU), and Consumer Staples (XLP) reside within the Improving Quadrant, with XLV strengthening. Technology (XLK) and Consumer Discretionary (XLY) remain within the Lagging Quadrant, with XLK attempting to move into the Improving Quadrant, while XLY has weakened.

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