Equities – The 10/22/21 surge above the prior 9/2/21 all-time high of 4,546 confirms a cup and handle and a head and shoulders top breakouts. The breakouts suggest SPX targets at 4,813 and 4,858.5-4,886. Although SPX can still trend higher, an overbought condition has developed as the RSI overbought/oversold indicator is currently trading at 76.39. Initial support rises to 4,598.5 (10/29/21 breakout), and below this to 4,546-4,552 (10/22/21 breakout), 4,520-4,525 (10/20/21 gap), 4,477.5-4,496 (50-day ma and the 10/19/21 gap-up breakout).
Fixed Income – The 10-year minus 3-mo US yield spread has contracted toward key initial support at 1.40-1.42 (50-day/200-day ma), and below this to 1.09-1.16 (Feb 2021 breakout). Initial resistance is 1.62-1.73 (Mar and Oct 2021 highs). The long-end of the US treasury yields are nearing key supports, while the short-end of the US treasury yields remain overbought. TNX is consolidating toward key initial support at 1.45-1.47% (50-day and 200-day ma). Key initial resistance is 1.691-1.765% (Mar/May 2021 highs).
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 is close to a breakout above 94.52-94.82, confirming a 2-year cup and handle pattern and the next USD rally to 96.56, 97.81-98.31, and 99.33-99.81. Initial support is 93.26-93.48. EURUSD failed at key resistance at 1.664-1.17, prompting a retest of initial support at 1.1493-1.1524. Violation warns of a decline toward 1.1422, 1.1255-1.13, and 1.1146-1.1168. JPYUSD has rebounded from key support at 0.8719-0.8730 toward key initial resistance at 0.8839 (Jul 2018 lows), and 0.8899-0.8916 (Apr 2019 and Feb 2020 lows).
S&P 500 Sectors – The RRG sector study shows investors favoring value and cyclical sectors. Energy (XLE) joins Consumer Discretionary (XLY) and Financial (XLF) in the Leading Quadrant. Technology (XLK) and Real Estate (XLRE) continue to consolidate within the Weakening Quadrant. Healthcare (XLV), Communication Services (XLC), Utilities (XLU), Consumer Staples (XLP), Materials (XLB), and Healthcare (XLV) remain in the Lagging Quadrant. Industrial (XLI) enters the Improving Quadrant with XLB close behind.
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