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Technical Report for the Week of 10/04/21

Technical Summary

Equities – SPX has violated its Mar/Apr 2021 uptrend channel (4,465-4,306) and the 50-day ma (4,443). Head and shoulders top also warns of further volatility. Below 4,232-4,306 (Jul/Sep/Oct 2012 lows and the 38.2% retracement from Mar-Sep 2021 rally) sends SPX down to retest the 200-day ma (4,138) and 50% retracement (4,135). The key initial resistance is 4,419.5-4,443 (9/28/21 gap down and 50-day ma), and above this to 4,465-4,501 (left/right shoulders and Mar/May 2021 uptrends), and 4,545.85 (9/21/21 all-time high).

Fixed Income – The 10-year minus 3-mo US yield spread continues with its steepening trend, as evidenced by the successful test of key support at 1.09-1.16 (prior breakout and Jul/Aug 2021 lows). The US treasury yields have broken out of their previous flat-to-sideways trading trends in anticipation of the Fed tapering as early as Nov 2021. TNX rebounded from key support at 1.129-1.135%. It is now challenging key initial resistance at 1.54-1.57% (Mar 2021 downtrend and Sep 2021 highs) and above this to 1.70-1.765% (Mar/May 2021 highs).

Commodities – CRB Index is rallying toward 233.5-236 (Apr 2015 high and 50% retracement from 2011-2020 decline). Initial support rises to 219.5-221.25 (9/15/21 breakout/ 50-day/10-wk ma). WTI Crude Oil is nearing major resistance at 75-77 (2008 structural downtrend, 50% retracement, and 2018/2021 highs). Key support is 68-70 (Sep 2021 lows, 10-wk, 30-wk, and 50-day ma). Gold remains confined to a near-term trading range between 1,673-1,677 (Mar/Aug 2021 lows) and 1,837-1,837.5 (7/29 and 9/3/21 highs).

Currencies – US Dollar is nearing formidable resistance at 94.61-94.82 (Sep 2020 highs and 38.2% retracement). Initial support is 93.47-93.75 (9/28/21 breakout) and 92.86 (50-day ma). EURUSD has violated neckline support below 1.1605-1.1664. The breakdown warns of the next decline to 1.4422-1.15. Initial resistance is 1.164-1.177 (50-day ma and the breakdown). JPYUSD broke the bottom of its 6-month trading below 0.8916-0.9012 (Feb 2020 and Mar/Jul 2021 lows) and is now attempting to bounce from 0.8916 (Feb 2020 bottom).

S&P 500 Sectors – In the past week, the RRG sector study shows a tilt away from S&P growth sectors toward value and cyclical sectors. Technology (XLK) and Healthcare (XLV) continue to correct within the Leading Quadrant, as evidenced by the tails trending lower. Communication Services (XLC) continues to rebound, but Real Estate (XLRE) continues to decline within the Weakening Quadrant. Consumer Staples (XLP), Energy (XLE), Industrials (XLI), and Materials (XLB) continue to recover within the Lagging Quadrant. Consumer Staples (XLP) is close to moving from Lagging to Improving Quadrant. Financials (XLF) has joined Utilities (XLU) and Consumer Discretionary (XLY) in the Improving Quadrant.

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