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Technical Report for the Week of 11/01/21

Technical Summary

Equities – The four gap-ups two weeks ago and recent breakout above the prior 9/2/21 all-time high of 4,546 confirms the 10/4/21 bottom (4,278.94), and most important, negates a 5-month bearish head and shoulders top. A subsequent bullish cup-and-handle breakout and positive outside month (Oct 2021) suggests the next SPX target to 4,813. Initial support rises to 4,546-4,552 (10/21 and 10/22 breakouts and the 10/27/21 low), 4,520-4,524 (10/20/21 gap-up), 4,489-4,496 (10/19/21 gap-up breakout)), and 4,440-4,459 (10/15/21 gap-up and the 50-day ma).

Fixed Income – The 10-year minus 3-mo US yield spread has contracted over the past week. However, there is key initial support at 1.40-1.41 (50-day/200-day ma), and below this to 1.09-1.16. Initial resistance is 1.63-1.73 (Mar and Oct 2021 highs). Overbought conditions across US treasury yields have led to consolidations. TNX encountered key resistance at 1.70-1.765% (Mar/May 2021 highs). TNX is nearing key initial support at 1.44-1.50% (extension of Mar 2021 breakout and 50/200-day ma).

Commodities – CRB's breakout above 233.5-236 hints of the next resistance at 243.67-245 (38.2% retracement from 2008-2021 decline and 2004 breakout). Support is 227-229 (50-day/10-wk ma), 221.25/214.5 (9/15/21 breakout), and 30-wk ma). WTI Crude Oil has broken out above pivotal resistance at 74-77, signaling the next WTI rally to the mid-80s/low-90s. Key support rises to 75-77 and 67-70.5. Gold continues to consolidate within a 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 has rebounded from key support at 93.26-93.47, suggesting another rally toward key resistance at 94.52-94.82 (Sep 2020/Sep Oct 2021 highs and 38.2% retracement. EURUSD has faded at resistance near 1.1664-1.171 (50-day ma and Sep 2021 breakdown and 38.2% retracement), prompting a retest of key support at 1.1493-1.1524. JPYUSD has faded near key initial resistance at 0.8839 (Jul 2018 lows), suggesting a retest of critical support at 0.8719-0.8930 (Nov 2017 and Oct 2018 bottoms).

S&P 500 Sectors – The RRG sector study shows investors favoring many of the value and cyclical sectors. Consumer Discretionary (XLY) joins Financial (XLF) in the Leading Quadrant. Technology (XLK) and Real Estate (XLRE) consolidate within the Weakening Quadrant. Healthcare (XLV) joins Communication Services (XLC), Utilities (XLU), Industrials (XLI), Consumer Staples (XLP), Materials (XLB), and Healthcare (XLV) in the Lagging Quadrant. Energy (XLE) continues to strengthen in the Improving Quadrant.

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