Equities – The SPX Index (SPX) retains its Nov 2020 uptrend channel between 4,262 and 4,526-4,554. The recent breakout above 4,2,38-4,257 still renders SPX targets to 4,434-4,453 (near-term), 4,526-4,554 (medium-term), and 4,595-4,774 (intermediate-term). However, a negative outside day on 7/16/21 warns of a near-term consolidation. The prior SPX rally (5/19-6/14/21) and subsequent correction found key support near its 50% retracement. Will the 6/18-7/13/21 rally and the recent correction also find key support near the 38.2%, 50%, and 61.8% retracements at 4,305, 4,278, and 4,251, respectively?
Fixed Income – In 3 previous U.S. yield curves steepening, two occurrences led to U.S. recessions and SPX bear declines (2000-2002 and 2007-2009). A third occurrence (2013) resulted in neither a U.S. recession nor an SPX bear decline. The key initial support is 1.16-1.24. TYX and TNX continue to diverge – on the rallies and corrections. TYX has violated its 200-day ma (1.96%), while TYX still maintains above its 200-day ma (1.256%). Currently, TYX/TNX has fallen to different retracements. TYX at the 50% retracement (Apr 2020-Mar 2021 rally) and TNX at 38.2% retracement.
Commodities – CRB Index is testing 215.5-217.72 (2011 downtrend and 7/1/21 high). A breakout suggests 234-236, 243.67, and 267.87. Initial is 208.5-209 (10-wk/50-day ma) and 193-196/182-183. WTI Crude Oil is challenging key resistance at 75-77 (2008 downtrend, Oct 2018 highs, and the 50% retracement from Jun 2008-Apr 2020 decline). Initial support is 69.7-70.25, 67-68, 60.5-62.5, and 55.5-57.25. Gold declined to 1,750.10 or the right shoulder of a head/shoulders bottom. Initial resistance is 1,829-1,838 and 1,919-1,926/1,950-1,962.5.
Currencies – U.S. Dollar continues with its attempt to negate a 7-month head/shoulders top and establish a firmer bottom. Key resistance is 92.84-93.47 and 94.33-94.82. Initial support is 91.06-91.47 (50-day/200-day ma). EURUSD continues with an 11-mo head/shoulders top or a triangle. Key resistance is 1.2243-1.2266/1.2349. Key support is 1.1605, 1.1703, and 1.1782 (11/4/20, 3/31/21, and 7/7/21 lows). JPYUSD continues to struggle to confirm the 0.9012-0.8956 Mar/Jul 2021 lows. Key initial resistance is 0.910/0.9304 (50-day ma & 4/23/21 high).
S&P 500 Sectors – RRG sector studies show a slight tilt toward a defensive stance from the prior week. Only 2 of the 11 S&P sectors (i.e., Communication Services (XLC) and Real Estate (XLRE)) are residing within the Leading Quadrant and 3 sectors (i.e., Technology (XLK), Consumer Staples (XLP), and Healthcare (XLV)) are in the Improving Quadrant. With 6 S&P sectors in the Weakening and Lagging Quadrants, this suggests a near-term consolidation and sector and stock selectivity over the near-term. Materials (XLB), Industrials (XLI), Financials (XLF), and Energy (XLE) continue to decline further within the Weakening Quadrant. Utilities (XLU) and Consumer Discretionary (XLY) remain confined to the Lagging Quadrant.
To view the entire report go to the Reports tab on the website or click the following: