Technical Report for the Week of 10/02/23

Technical Summary

Equities – A recent violation of the bottom of the Jun 2023 triangle (now at 4,394), six negative outside days (7/27, 8/4, 8/10, 8/24, 9/1, and 9/20), and three gap-downs (8/2, 9/6, and 9/21) warn of SPX consolidation or correction. The next pivotal support is 4,256 (bottom of Oct 2022 uptrend channel) and 4,180-4,199.5 (May 2023 breakout and 200-day ma). Initial resistance falls to 4,329-4,370/4,394 (late Jun and Aug 2023 lows/extension of triangle breakdown) and 4,453-4,473 (Jul downtrend and the 50-day ma).

Fixed Income – 10-year minus 3-month yields (-0.96) have rebounded to key resistance at -0.95 (2001 bottom). 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 – Breakout above 4.333-4.362% (Oct 2022/Aug 2023 highs) suggests 4.54-4.66% and 5.32-5.46%. Initial support is 4.33-4.36 and 4.06-4.22%.

Commodities – CRB – Above the top of the 2022 downtrend channel (265) confirms breakout and suggests 301.75 (8/30/23 high). Initial support is 281.5-282 (Jul/Aug 2023 highs) and 279-280. WTI Crude – Breakout above 83.5-85 (Dec 2022 and Apr/Aug 2023 highs) suggests 93.5-95.5, 97-97.5, and 101.88. Initial support is 88-88.5 (9/26 low) and 83.5-85 (50-day ma). Gold – The sharp correction nears the next support at 1,867-1,882.5 (Nov 2021/Jun 2022 highs and Mar 2023 channel). Resistance is 1,900.5-1,913.5.

Currencies – USD – A recent golden cross buy signal hints at a retest of key resistance near 104.5-106.5 (2023 highs and right shoulders). Initial support is 104.21-104.61 (9/14/23 low) and 103-103.5 (50/200-day ma). EURUSD – Violation 1.08-1.09 (2023 uptrend channel and 50/200-day ma) and a death cross-sell signal warns at a retest of support at 1.0483-1.0516/1.035-1.037. USDJPY – Key resistance is 151.95 (Oct 2022 high). Initial support rises to 145-146 (Aug 2023 breakout and the 50-day ma) and 142-143 (uptrend).

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

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