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Technical Report for the Week of 09/20/21

Equities – SPX continues with a bullish Apr/May 2021 uptrend channel between 4,423 and 4,571-4,590. A near-term inflection has developed as SPX tests key initial support at 4,423-4,436 (50-day ma and the bottom of the Apr/May 2021 uptrend channel). Violation here coupled with a lower-low or below 4,368 (8/19/21 low) warns of a deeper correction to 4,232-4,257 (38.2% retracement from Mar-Sep 2021 rally, 7/19/21 low, and channel breakdown target). On the other hand, the ability of SPX to maintain its 50-day ma (4,436) and the bottom of the Apr/May 2021 uptrend channel (4,423) signals the next SPX rally to 4,546-4,595 (9/2/21 all-time high, the top of the Apr/May 2021 channel, and V-pattern breakout target), and 4,757 (Apr/May 2021 channel breakout target).

Fixed Income – The 10-year minus 3-mo US yield spread has contracted this year and is nearing an inflection point. Key support is 1.09-1.16 (prior breakout and Jul/Aug lows). Key resistance is 1.63-1.73 (Mar 2021 highs and 61.8% retracement from 2013-2019). TNX is rebounding from key support at 1.129-1.135% (50% retracement from the Aug 2020-Mar 2021 rally and the Jul/Aug 2021 lows). However, there remains pivotal resistance at 1.38-1.42% (7/13 and 8/12/21 highs), 1.47-1.57% (Jul 2021 breakdown), and 1.70-1.765% (Mar/May highs).

Commodities – CRB Index is nearing an inflection at pivotal resistance at 220. A breakout confirms real inflation. However, failure to breakout hints at the return to nominal inflation. WTI Crude Oil is challenging structural resistance at 74-77 (2008 downtrend and Jul/Oct 2018 highs). Key support rises to 61.5-64 (200-day, 10-mo ma, and Mar/Aug 2021 lows). Gold remains in a sideways trading range between key support at 1,673-1,676 (Mar/Aug 2021 lows) and key resistance at 1,838-1,827/1,919.

Currencies – US Dollar continues with its trading range between 89.17-89.51 (Jan/May 2021 lows) and 94-95 (Sep/Nov 2020 and Mar/Aug 2021 highs). EURUSD retains two head/shoulders top patterns. Key support is 1.15-1.7 (Sep/Nov 2020 and Mar/Aug 2021 lows), and key resistance is 1.2349-1.2555 (2018/2021 highs). JPYUSD shows a large head/shoulders top, a triangle pattern, and a trading range between 0.8916-0.9012 and 0.9197-0.9304.

S&P 500 Sectors – The RRG sector study shows a slight defensive tilt from the previous week. Technology (XLK) and Healthcare (XLV) remain in the Leading Quadrant, but the tails of both sectors have trended lower for the past four consecutive weeks, suggesting continued corrections. Communication Services (XLC) and Real Estate (XLRE) continue to consolidate in the Weakening Quadrant. Consumer Staples (XLP), Financials (XLF), Energy (XLE), Industrials (XLI), and Materials (XLB) have turned higher within the Lagging Quadrant. XLP is close to moving into the Improving Quadrant. Utilities (XLU) continues to strengthen, and Consumer Discretionary (XLY) continues to weaken within the Improving Quadrant.

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