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Technical Report for the Week of 08/14/23

Equities – SPX – Breakouts of pivotal resistances at 4,195.44 and 4,325.28 confirm an intermediate-term trend reversal and suggest targets at 4,695 (top of Mar 2023 uptrend channel), 4,818.62 (1/4/22 all-time high), and 4,950. Three (3) negative outside days (7/27, 8/4, and 8/10/23), 8/2/23 gap-down, and the failure at 4,607 (7/27/23 high) to clear the top of the Mar 2023 uptrend channel (4,695) warns of consolidation to initial support at 4,438-4,463 (bottom of Mar 2023 uptrend channel, 7/12/23 gap-up, and 50-day ma), 4,419, and 4,302-4,328.

Fixed Income – TNX minus 3-month Treasury yield – Spread nears key resistance at -1.40 to -1.22 (Jan 2023 lows, Jul/Aug 2023 highs, and 200-day ma). Initial support is -1.78 to -1.60 (50-day ma and 6/26 and 7/19/23 lows). Fed Funds and 2-year US Treasury yield approach the Feb 2007/Jun 2006 highs, suggesting the Fed nears the end of its tightening process. TNX – Breakout above Sept/Oct 2022 downtrend channel (3.84%) and 4.091-4.094% hints at a trend reversal to 4.223-4.333%. Initial support is 3.71-3.87% (50/200-day ma).

Commodities – CRB – A breakout above the top of the 1-year downtrend channel (269), 200-day ma (270), and Jan/Apr 2023 highs confirm a reversal. Key support is 269-270 (50-day and 200-day ma). WTI Crude – Above 75-77 (top of 2022 downtrend channel and 50-day/200-day ma) and 83.5-85 (Dec 2022 and Apr/Aug 2023 highs) reaffirm a trend reversal. Initial support is 75-77 (downtrend and 50/200-day ma). Gold – Recovery stalled at 2,001-2,015 (Apr 2022 Feb/Mar/Jun/Jul 2023 highs). Initial support is 1,936-1,942/1,901-1,902.

Currencies – USD – The 2022 head and shoulders top remains intact. Below 100.42-100.68 and 99.15-99.22 confirms a top. A trading range has developed between 100.42-100.68 and 102.5-103.5. EURUSD – The recent rally faded at 1.1276, or near the 61.8% retracement (1.13) from the 2020-2022 decline. Initial support is 1.0834-1.095 (50-day ma) and 1.0635-1.076 (200-day ma). USDJPY – Rally from Jul 2023 (137.24) nears key resistance at 145.07-145.90 (Sept 2022/Jun 2023 highs). Initial support is 141.5 and 136.5-138.

S&P 500 Sectors – RRG study shows a lot of sector rotations from the prior weeks. Consumer Discretionary (XLY) is the sole S&P sector in the Leading Quadrant. Technology (XLK) and Communication continue to weaken within the Weakening Quadrant. Utilities (XLU) and Consumer Staples (XLP) strengthen within the Lagging Quadrant. Real Estate (XLRE) and Healthcare (XLV) join Industrial (XLI), Materials (XLB), Financial (XLF), and Energy (XLE) in the Improving Quadrant.

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