Technical Report for the Week of 08/16/21

Technical Summary

Equities – Despite the strong gains this year, SPX continues with its well-defined May 2021 uptrend channel between 4,352 and 4,512. The recent 8/6/21 breakout above 4,429.77 suggests +57.46 or an SPX target of 4,487-4,512, near-term. The 7/23/21 breakout above 4,393.68 also suggests 160.55 points or 4,554.23, medium-term. The key initial support rises to 4,423-4,430 (8/6/21 breakout), and below this to 4,373-4,394 (7/23/21 breakout and 7/23 and 8/3/21 lows), 4,352 (Bottom of the May 2021 uptrend channel), and 4,233-4,257 (7/19/21 low and Jun 2021 breakouts).

Fixed Income – The steepening of the 10-year/3-mo US yield spread is testing key support at 1.14-1.26 (prior breakout and 200-day ma), signaling an inflection point. US yields including 30-year, 10-year, 5-year, 3-year, and 2-year have broken down. However, the 30-year yield is attempting to breakout. TNX may have found key support at 1.129-1.135% or the 50% retracement (1.135%) from Aug 2020-Mar 2021 rally and Jul/Aug 2021 lows (1.128-1.129%). Key initial resistance is 1.306-1.373% (50-day/200-day ma) and 1.471% (Jul breakdown).

Commodities – CRB Index has broken several pivotal resistances, suggesting the next CRB rally to 233.5-244 and 267-287. Initial support is 212.5 (50-day ma), 200-205, and 191. WTI Crude Oil has struggled at key resistance at 75-77 (2008 downtrend, Oct 2018 highs, and the 50% retracement from Jun 2008-Apr 2020 decline). Key support is 65 (30-wk ma and Jul/Aug 2021 lows) and 60.5-61.5. Gold is rebounding from key support at 1,673-1,677 (Mar/Aug 2021 lows). Key initial resistance is 1,808-1,817 (50-day/200-day ma), and 1,919-1923/1,947-1,962.5.

Currencies – US Dollar continues with its base via triangle and two higher-low patterns. Key resistance is 93.21-93.47 and 94.61-94.82. Initial support is 91.39-92.04 (50-day and 200-day ma) and 89.17-89.51/88.15. EURUSD continues with head/shoulders top or triangle pattern. Key resistance is 1.189-1.20 (50-day/200-day ma) and 1.2243-1.2266/1.2349. Key support is 1.1703-1.1706/1.1605. JPYUSD continues to bottom. Key resistance is 0.917 and 0.9304-0.932 (200-day ma). Key support is 0.8956-0.9012 and 0.8899-0.8916.

S&P 500 Sectors – RRG sector studies show a defensive tilt among the S&P sectors from the prior week. Technology (XLK) and Healthcare (XLV) are the only two S&P sectors residing in the Leading Quadrant as they continue to trend higher. Two S&P sectors, including the Communication Services (XLC) and Real Estate (XLRE), have slipped into the Weakening Quadrant, suggesting corrections. More than half or six S&P sectors reside in the Lagging Quadrant - Consumer Staples (XLP), Financials (XLF), Energy (XLE), Industrials (XLI), Utilities (XLU), and Materials (XLB). Consumer Discretionary (XLY) is the only sector trending higher within the Improving Quadrant.

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Technical Summary Equities – Critical SPX support is 3,810-3,837 (bottom of Jan 2022 downtrend channel, 38.2% retracement from Mar 2020-Jan 2022 rally, 61.8% retracement from Oct 2020-Jan 2022 rally,