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Technical Report for the week of 11/06/23

Technical Summary

Equities – SPX – Finding support at 4,103.78 (10/27/23 low) or the 61.8% retracement from the Mar-Jul 2023 rally and two gap-ups (11/1 and 11/3) has triggered an oversold rally. Key initial resistance is 4,389-4,415 (Sept 2023 downtrend, Oct 2023 highs, 9/21/23 gap-down, and 61.8% retracement from Jul-Oct 2023 decline) and above 4,429-4,461 (Jun and 9/20/23 highs and top of Jul 2023 downtrend channel). Initial support is 4,320-4,334 (11/3 gap-up), 4,245.5-4,268 (11/2 gap-up and 200-day ma), and 4,104-4,125 (5/24 and 10/27 lows and the bottom of 2023 channel).

Fixed Income – 10-year minus 3-month yields (-0.96) rebounded to -0.62 near key resistance at -0.64 to -0.52 (2007/2009 lows). In 4 previous yield expansions, 3 led to recessions and 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), but the 2-year (5.07) nears Jun 2006 highs (5.20), implying one more Fed rate hike. TNX – Breakout above 4.333-4.362% suggests 5.00% (achieved) and 5.32-5.46%. Initial support is 4.50-4.56%/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 279-280 (Jul 2023 breakout) and 272-274.5. WTI Crude – Rally stalled at resistance near 93.5-95.5 (Mar 2022 downtrend and Oct/Nov 2022 highs). Below initial support at 81.5-83.5 suggests 77.5-80 (Aug/Oct 2023 lows and 200-day ma). Gold – Recovery from nears key resistance at 2,011- 2,019 (Mar, Jul, and Oct 2023 highs). Initial support is 1,975-1,980 and 1,938-1,947.

Currencies – USD – The Jul-Oct 2023 recovery failed at key resistance (107-109). The 11/2/23 gap-down and violation of 50-day ma (105.5) warns of retest of 104.51-104.62 and 102.85-103.27. EURUSD – Violation 1.08 (2023 uptrend channel and 200-day ma) and a death cross-sell signal triggered a decline to support at 1.0448-1.0516. The key resistance is 1.081 (200-day ma). USDJPY – Rally stalled at key resistance (151.95 - (Oct 2022 high). Initial support rises to 147.26-148.5 (50-day ma) and 145-146 (Aug 2023 breakout).

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

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