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Technical Report for the Week of 09/25/23

Equities – A recent violation of the Mar 2023 uptrend channel (4,629), six negative outside days (7/27, 8/4, 8/10, 8/24, 9/1, and 9/20), three gap-downs (8/2, 9/6, and 9/21), and a 4-month h/s top warns of consolidation. Initial support is 4,325-4,335 (Jun 2023 breakout, 6/26 and 8/18 lows, and neckline) and below 4,302 (61.8% retracement from Mar-Jul 2023 rally). Initial resistance is 4,376-4,401 (9/21 gap-down) and above 4,448.5-4,477 (Jun and 9/20 highs and the 50-day ma), 4,512 (Jul 2023 downtrend), and 4,541-4,567.5 (9/11/23 high and 8/2/23 gap-down).

Fixed Income – 10-year minus 3-month yields (-1.12) have begun to expand again. In four previous yield expansions, three led to recessions and SPX bear declines. 2013 scenario resulted in neither. Is this a repeat of the former or the latter? Fed Funds and 2-year yields achieved Feb 2007 highs and near the Jun 2006 highs, implying the Fed may have one more rate hike left. TNX – Recent breakout above 4.333-4.362% (Oct 2022 and Aug 2023 highs) suggests 4.54-4.66% and 5.32-5.46%. Initial support is 4.33-4.36%, 4.06-4.14%, and 3.86-3.96%.

Commodities – CRB – Above the top of the 2022 downtrend channel (267) confirms breakout and suggests 301.75 (8/30/23 high). Initial support is 282 (Jul/Aug 2023 highs) and 278-280. WTI Crude – Above 83.5-85 (Dec 2022 and Apr/Aug 2023 highs) confirms breakout and rally to 93.5-94, 97-99, and 101.88. Initial support is 83.5-85 (Aug 2023 breakout) and below 82.5. Gold – Resistance is 1,954-1,980 (50-day ma, May downtrend, and 9/1/23 high). Initial support is 1,922-1,934 (Sept 2023 lows and 200-day ma) and 1,900.5-1,908.5.

Currencies – USD – 9/14/23 positive outside day hints at a retest of key resistance near 104.5-106 (2023 highs and right shoulders). Initial support is 104.21-104.61 (9/14/23 low) and 102.5-103 (50/200-day ma). EURUSD – Violation of pivotal support at 1.08-1.09 (bottom of 2023 uptrend channel and 50-day/200-day ma) warns of weakness. The next support is 1.0630-1.0635. USDJPY – Key resistance is 151.95 (Oct 2022 high). Initial support is 144-145 (Aug 2023 breakout and 50-day ma) and 142-143 (Mar uptrend/Oct 2022 downtrend).

S&P 500 Sectors – RRG study shows similar rotations from the prior week. Energy (XLE) remains within the Leading Quadrant. Technology (XLK) and Consumer Discretionary (XLY) weakened, and Communication Services (XLC) improved within the Weakening Quadrant. Consumer Staples (XLP) joins Utilities (XLU), Real Estate (XLRE), Healthcare (XLV), Industrial (XLI), Materials (XLB), and Financial (XLF) in the Improving Quadrant. XLI, XLB, and XLRE weakened, and Financials and Healthcare strengthened.

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