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Technical Report for the Week of 06/29/20

Updated: Jun 30, 2020

Technical Summary

Equities – Although a retest of its all-time high (3,393.52) is still possible, a negative outside week (6/8/20), a bearish island reversal (6/11/20), a negative outside day (6/19/20), and another bearish island reversal (6/24/20) warns of a correction to key initial support at 2,980-3,021 (50-day ma and 200-day ma), and below this to 2,946-2,966 (5/26/20 gap-up breakout and 6/15/20 low), and then to 2,835-2,914 (38.2% retracement from Mar-Jun 2020, 4/21/20 uptrend, and 5/18/20 gap up). The spread (40.87) between 50-day ma (2,980) and 200-day ma (3,021) continues to contract. This hints of an impending major battle between the bulls and bears. A golden cross buy signals the resumption of the Mar 2020 recovery. Failure of the 50-day ma to cross above the 200-day ma warns of the next major correction. An inside week on 6/22/20 also suggests market uncertainties.


Fixed Income – Copper/Gold ratio (CGR) and the 10-year US Treasury yields (TNX) have strong historical correlations. Does the Mar 2020 CGR rebound from major support (1980 and 1987 lows) hint of a major TNX bottom? Nonetheless, 10-year and 30-year US Treasury yields (TNX and TYX) have generated recent bearish island reversals on 6/9/20 and have also struggled to convincingly breakout above key resistances at 1.76-1.83% and 0.957-0.989%, respectively. This warns of consolidations to key supports. For TYX it is 1.39%, 1.126-1.251%, and then 0.837%. For TNX it is 0.648-0.651%, 0.543-0.581%, and then 0.398%.


Commodities – CRB Index has encountered key initial resistance at 134.48-144.67 (38.2-50% retracement from the Jan-Apr 2020 decline). Key initial support is at 131.5-133.5, and below this to 127.5-129, 124-126, and then to 118.5-121. WTI Crude Oil has generated a positive outside week (6/15/20). However, key resistance remains at 41-43 (Mar 2020 h/s top breakdown, 61.8% retracement from the Jan-Apr 2020 decline, and the pivotal 30-wk ma). Gold has also generated a positive outside day (6/26/20). It continues to consolidate its gains via a 3-mo triangle pattern between 1,666-1,672 and 1,789-1,796.


Currencies – US Dollar Index (USD) continues to struggle to clear above key initial resistance at 98.27-98.66 (200-day and 50-day ma). Key initial support remains near 94.61-95.71 (Mar/Jun 2020 lows). EURUSD has improved but recent failure to breakout above key resistance (1.1422-1.1493) warns of a correction to key initial support at 1.104-1.107 (50-day, 200-day, and the 10-mo ma). JPYUSD remains confined to a neutral trading range between key initial support at 0.923-0.931 (50-day and 200-day ma) and key initial resistance at 0.9427-0.947 (May and Jun 2020 highs).


S&P 500 Sectors In the past 8 weeks ending on June 22, 2020, SPX continues with its corrective phase. Healthcare (XLV 0.1%) has slipped deeper into the Weakening Quadrant. This suggests a healthy near-term consolidation. Technology (XLK 14.5%), Communication Services (XLC 6.0%), and Consumer Discretionary (XLY 10.5%) retain their leadership roles within the Leading Quadrant. Consumer Staples (XLP -0.1%), Utilities (XLU -0.4%), and Real Estate (XLRE 3.4%) continue to weaken further within the Lagging Quadrant. Financial (XLF 3.0%), Energy (XLE 3.1%), Industrials (XLI 6.7%), and Materials (XLB 7.9%) continue to improve within the Improving Quadrant. XLB appears to be gaining technical strength in recent weeks and is poised to move into the Leading Quadrant.


To view the entire report go to the Reports tab on the website or click the following:


https://72150fac-a2b1-4107-bcb6-58c3b0a146d7.filesusr.com/ugd/f8f1c6_bdc9ac64fab64ef88a986dd6daba6393.pdf

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