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Technical Report for the Week of 10/23/23

Equities – SPX – A violation of neckline at 4,328-4,335 (9/22/23), 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. Next support is 4,195-4,233 (200-day ma, 50% retracement from Mar-Jul 2023 rally, 10/3/23 low, and May 2023 breakout) and below 4,166 (bottom of Jul 2023 channel), and 4,104-4,114 (61.8% retracement and 5/24/23 island reversal low). Initial resistance is 4,328-4,335 (9/22/23 neckline), 4,386-4,401 (50-day ma), and 4,448-4,461 (top of the Jul downtrend).

Fixed Income – 10-year minus 3-month yields (-0.65) have rebounded to key resistance at -0.64 to -0.52 (2007/2009 lows). In 4 previous yield expansions, 3 led to recessions/bear markets, and 1 (2013 scenario) resulted in neither. Is this a repeat of the former or the latter? Fed Funds achieved Feb 2007 highs (5.26) and 2-year nears Jun 2006 highs (5.20), implying the Fed may have one more rate hike left. TNX – Breakout above 4.333-4.362% suggests 5.00% and 5.32-5.46%. Initial support is 4.33-4.45% and below 4.091-4.094%.

Commodities – CRB – Above the 2022 downtrend channel (265) and 200-day ma (271.5) confirms a breakout and suggests 301.75 (8/30/23 high). Initial support is 280-282 (Aug 2023 highs and 50-day ma) and 274-275. 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 85-86 (50-day ma), 81.5-84.5, and 78. Gold – The Sept-Oct 2023 correction rebounded from key support at 1,811-1,824.5 (Feb/Mar 2023 lows). Resistance is 2,001-2,011 and 2,015.

Currencies – USD – Late Sept 2023 golden cross buy signal suggests a rally to key resistance at 107.5-109. An overbought condition hints at consolidation to initial support at 105.33-105.87 and below 104.17-104.93 (50-day ma). EURUSD – Violation 1.08 (2023 uptrend channel and 200-day ma) and a death cross-sell signal warns at decline to support at 1.0448-1.0516 and 1.035-1.0368. USDJPY – Key resistance remains at 151.95 (Oct 2022 high). Initial support rises to 147.26-147.74 (50-day ma) and 145-146 (Aug breakout).

S&P 500 Sectors – RRG study shows deteriorations 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), Industrials (XLI), and Real Estate (XLRE) slip into the Lagging Quadrant. Utilities (XLU), Healthcare (XLV), Materials (XLB), and Financial (XLF) remain in the Improving Quadrant, with XLB, XLV, and XLF weakening.

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