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Technical Report for the Week of 07/24/23

Equities – SPX – Breakouts of pivotal resistances (4,195.44 and 4,325.28) confirm the primary uptrend. Above 4,601 or the top of the Mar 2023 accelerated uptrend channel renders the next SPX resistances at 4,637 (3/29/22 high), 4,818.62 (1/4/22), and above 4,744-4,749 (Nov 2021 and 1/12/22 highs), and 4,818.62-4,861 (Jan 2022 all-time high). Initial support is 4,444-4,463 (7/12/23 gap-up) and 4,398-4,422 (6/30/23 gap-up). Below this, 4,385 (7/6/23 low) and 4,325-4,349 (6/12/23 breakout, 6/26/23 low, the bottom of Mar 2023 uptrend channel, and 50-day ma).

Fixed Income – TNX minus 3-month Treasury yield – The spread fell to -1.89 (5/4 and 6/1/23) before rebounding to -1.40, failing at key initial resistance (-1.32 - Jan 2023 lows). Initial support is -1.78 to -1.74 and -1.89. Fed Funds and 2-year US Treasury yield near their respective Feb 2007 and Jun 2006 tops. Is the Fed nearing the end of its tightening process? TNX – Above the top of the Sept/Oct 2022 downtrend channel (3.84%) and 4.091-4.094% confirm a trend reversal. Initial support rises to 3.71-3.75% (50-day and 200-day ma).

Commodities – CRB – A breakout above the top of the 1-year downtrend channel (270) and 278.93-280.25 (Jan/Apr 2023 highs) confirms reversal. Initial support is 270 (200-day ma)/263-263.5. WTI Crude – Above 77-78 (top of 2022 downtrend channel and 200-day ma) and 81-83.5 (Dec 2022 and Jan/Feb/Mar/Apr 2023 highs) confirm breakout. Initial support is 74-75 (Jun 2023 breakout) 72-72.5 (50-da ma). Gold – Recovery nears key resistance at 1,970-2,003 (Apr 2022 and Feb, Jun, and Jul 2023 highs. Initial support is 1,936-1,945/1,901.

Currencies – USD – A neckline breakdown below 100.42-100.68 and a violation of 99.15 (61.8% retracement) confirms a top. Initial resistance is 101.5-102.5, 103.25-104.5, and 105.5-106. EURUSD –2022 downtrend breakout/golden cross buy suggest a trend reversal. Rally faded at 1.1276 (7/18/23) or the 61.8% retracement from the 2020-2022 decline. Initial support is 1.1013-1.1096 and 1.0834-1.090. USDJPY – A consolidation has developed between 137.13-138 (200-day ma) and 145.07-145.9-145.07.

S&P 500 Sectors – RRG study shows concentrated strengths in four sectors, including Consumer Discretionary (XLY) and Technology (XLK) in the Leading Quadrant and Financial (XLF) and Industrial (XLI) in the Improving Quadrant. Communication Services (XLC) continues to weaken in the Weakening Quadrant. Healthcare (XLV), Utilities (XLU), Consumer Staples (XLP), Materials (XLB), Real Estate (XLRE), and Energy (XLE) remain in the Lagging Quadrant. XLB, XLRE, and XLE improve via strengthening in relative momentum.

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