Technical Report for the Week of 09/06/21
Equities – The SPX monthly chart shows a bullish 11-year uptrend channel between 3,148-3,349 and 4,622. A convincing move above key resistance at 4,595-4,622 confirms an accelerated channel breakout and renders an SPX target of 6,096, longer-term. However, failure to convincingly clear above 4,595-4,622 also warns of the next SPX correction. Key initial support rises to 4,408-4,425 (50-day and 10-wk ma), and below this to 4,063.5-4,199 (200-day and 30-wk ma). Additional longer-term support is 3,849-3,964, 3,393.5-3,588, and 3,393.52.
Fixed Income – The 10-year minus 3-mo US yield spread continues to test 1.09-1.16 (prior breakout and Jul/Aug lows), signaling an inflection. The 50-day ma (1.26) has crossed below the 200-day ma (1.28). Is the death cross sell signal a warning of another contraction in yield spread? TNX is attempting to rebound from support at 1.129-1.135% (50% retracement from the Aug 2020-Mar 2021 rally and the Jul/Aug 2021 lows). Resistance is 1.38-1.42% (7/13 and 8/12/21 highs), 1.47-1.57%, and 1.70-1.765%. Will a death-cross sell signal warn of a major trend reversal?
Commodities – CRB Index is nearing an inflection at 215-220. A breakout confirms inflation. Failure to breakout signals a return to nominal inflation between 157-161 & 215-220? WTI Crude Oil continues to challenge structural resistance at 74-77 (2008 downtrend and Jul/Oct 2018 highs). Key support rises to 61.5-63.5 (200-day, 10-mo ma, and Mar/Apr 2021 lows). Gold cleared its Jun 2021 downtrend. Key resistance is 1,837.5, 1,919-1,923, and 1,947-1,962.5. Support is 1,797-1,810.5 and 1,750/1,673-1,677.
Currencies – US Dollar continues to show signs of a bottom. A breakout occurs above 93.47-93.75. Failure to breakout suggests a retest of key initial support at 91.37-91.78 (200-day ma and 7/30/21 low). EURUSD retains its h/s top or triangle pattern. Breakdown occurs below 1.1605-1.1703. Key initial resistance is 1.20 (200-day ma and Sep 2020 highs). JPYUSD continues with its near-term technical base. Key initial resistance is 0.9197-0.9304 (Apr/Aug 2021 highs and 200-day ma). Key support is 0.8956-0.9012 and 0.8899-0.8916.
S&P 500 Sectors – The RRG sector studies show minor changes from the previous week. Technology (XLK) and Healthcare (XLV) remain in the Leading Quadrant. However, the tails are beginning to trend lower, suggesting overbought conditions. Communication Services (XLC) and Real Estate (XLRE) continue to correct in the Weakening Quadrant. Consumer Staples (XLP), Financials (XLF), Energy (XLE), Industrials (XLI), and Materials (XLB) remain in the Lagging Quadrant. However, XLF, XLB and XLI are trending higher, and XLE and XLP are trending lower. Utilities (XLU) and Consumer Discretionary (XLY) remain in the Improving Quadrant. Investors remain selective, favoring defensive sectors (XLV and XLU) and growth/cyclical sectors (XLK and XLY).
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