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Technical Report for the week of 10/30/23

Technical Summary


Equities –SPX – Selling has accelerated after violations of key supports, including the Oct 2022 uptrend (now at 4,357), the 200-day ma (4,240.25), the May 2023 breakout (4,195.44), and the bottom of the Jul 2023 downtrend channel (4,150). The ability to find support at 4,113 (61.8% retracement from the Mar-Jul 2023 rally) coupled with an oversold condition (RSI = 29.05) can trigger a technical bounce. Initial resistance is 4,195-4,240 (200-day ma) above 4,335-4,361.5 (50-day ma), and 4,393.5-4,401 (9/21/23 gap-down).

Fixed Income – 10-year minus 3-month yields (-0.75) 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 have exceeded the 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% (achieved) and 5.32-5.46%. Initial support is 4.50-4.53%/4.33-4.36%.


Commodities – CRB – A breakout above the 2022 downtrend channel (265) and 200-day ma (272) suggests 290.29/301.75 (Sept 2023/Aug 2022 highs). Initial support is 283/279-280 (50-day ma/Jul 2023 breakout). WTI Crude – Rally stalled at key resistance near 93.5-95.5 (Mar 2022 downtrend and Oct/Nov 2022 highs). Initial support is 81.5-83/78 (Oct 2023 lows/200-day ma). Gold – Recovery from key support at 1,811-1,824.5 (Feb/Mar/Oct 2023 lows) led to a sharp rally to 2,011- 2,015 (Mar/Jul 2023 highs, achieved).


Currencies – USD – Late Sept 2023 golden cross buy signal suggests a rally toward key resistance at 107.5-109. An overbought condition hints at a trading range between 105.16-105.22 and 107.05. 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. Resistance is 1.066-1.081 (50-day and 200-day ma). USDJPY – Key resistance remains at 151.95 (Oct 2022 high). Initial support rises to 147.26-148.16 (50-day ma) and 145-146 (Aug breakout).


S&P 500 Sectors – RRG study shows continued deteriorations from the previous week. Communication Services (XLC) joins Energy (XLE) in the Leading Quadrant. Technology (XLK) and Consumer Discretionary (XLY) remain in the Weakening Quadrant. Consumer Staples (XLP), Industrials (XLI), and Real Estate (XLRE) remain in the Lagging Quadrant. Utilities (XLU), Healthcare (XLV), Materials (XLB), and Financial (XLF) remain in the Improving Quadrant, with XLU improving and XLV, XLB, and XLF weakening.


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