Equities – Last week, SPX has briefly violated its March 2021 uptrend (4,426-4,483) and the crucial 50-day ma (4,439). However, it has successfully found key support just above the pivotal 38.2% retracement (4,281.37) from the Mar-Sep 2021 rally. The ability of SPX to quickly closed the 9/20/21 gap-down breakdown (4,403-4,428) and trade above the 50-day ma (4,439) hints of a market bottom. The next challenge for SPX is to clear key initial resistance at 4,454-4,465, corresponding to the 61.8% retracement from 9/2-9/20 decline, 9/23/21 high, and the Sep 2021 downtrend.
Fixed Income – The 10-year minus 3-mo US yield spread has recently confirmed a successful test of key support at 1.09-1.16 (prior breakout and Jul/Aug 2021 lows). The successful test reaffirms a cup and handle breakout and suggests the resumption of a steepening US yield curve. The shorter-term and long-to-intermediate-term US yields are diverging. Are traders expecting the Fed to taper before year-end? TNX may have successfully tested key support at 1.129-1.135%. Next resistance is 1.38-1.47%, and above this to 1.53%, and 1.70-1.765%.
Commodities – CRB Index is rallying toward 233.5-244 (Apr 2015 high and 38.2% retracement from 2008-2020 decline). Initial support rises to 217 (50-day ma) and 200-205 (May, Jun, and Jul 2021 lows). WTI Crude Oil is nearing key resistance at 74-77 (2008 structural downtrend and the 2018/2021 highs). Key support rises to 67.5-70 (Sep 2021 lows, 10-wk, 30-wk, and 50-day ma). Gold remains in a near-term trading range between 1,673-1,676 (Mar/Aug 2021 lows) and 1,837-1,837.5 (7/29 and 9/3/21 highs).
Currencies – US Dollar continues with its 2-year bottoming pattern. Above 93.47-94.75 confirms a breakout. Initial support is 92.75 (50-day ma) and 91.5-91.8 (200-day ma and the Sep 2021 low). EURUSD retains a head/shoulder top or triangle pattern. Key support is 1.1605-1.1664 (neckline). Key resistance is 1.19-1.198 (Sep 2021 high/200-day ma). JPYUSD is nearing the bottom of its 6-month trading range between 0.8916-0.9012 (Feb 2020 and Mar/Jul 2021 lows) and 0.9197-0.925 (Aug 2021 and 200-day ma).
S&P 500 Sectors – The RRG sector study shows minor sector shifts from the previous week. Technology (XLK) and Healthcare (XLV) remain in the Leading Quadrant, but the tails of both sectors continue to trend lower, suggesting corrections. Communication Services (XLC) is rebounding, and Real Estate (XLRE) continues to decline within the Weakening Quadrant. Consumer Staples (XLP), Financials (XLF), Energy (XLE), Industrials (XLI), and Materials (XLB) continue to recover within the Lagging Quadrant. XLP is close to moving into the Improving Quadrant. Utilities (XLU) and Consumer Discretionary (XLY) continue to weaken within the Improving Quadrant.
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