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Technical Report for the Week of 11/11/21

Technical Summary

Equities – The daily and the weekly charts suggest SPX is nearing a critical period. Another battle continues to develop between the bulls and the bears. The ability of SPX to find support at the 50-61.8% retracements (4,244-4,301) from the May-Sep 2021 rally and the 30-wk ma (4,287.50) hint of a bottom. However, an inside week (10/4/21) and the recent negative outside day (10/11/21) warn of a trading range between 4,279 and 4,457. Above 4,449.5-4,465, coinciding with the 50-day ma and the 9/20/21 and 9/27/21 highs, confirm a technical breakout. Violation of 4,279-4,306 (the Sep and Oct 2021 lows) and 4,232-4,232 (7/19/21 low and the 38.2% retracement from Mar-Sep rally) confirms a breakdown.

Fixed Income – The 10-year minus 3-mo US yield spread continues with its steepening trend. The next resistance is 1.73 Mar 2021 highs). The US treasury yields continue to trend higher after breaking out of their previous flat-to-sideways trading trends. The market appears to be anticipating a Fed taper as early as Nov 2021. TNX has broken out above resistance at 1.54-1.57% (Mar 2021 downtrend and Sep 2021 highs), signaling a retest of 1.70-1.765% (Mar/May 2021 highs). Key initial support is 1.35-1.40 (50/200-day ma).

Commodities – CRB Index breakout is inflationary. Next target is 233.5-236 (Apr 2015 high and 50% retracement from 2011-2020 decline). Initial support rises to 220-221.25 (9/15/21 breakout and the 50-day/10-wk ma). WTI Crude Oil has broken out above pivotal resistance at 75-77, signaling the next WTI rally to the mid-80s/low-90s. Key support rises to 74-75 and 68.5-71. Gold continues to struggle with 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 nearing major resistance at 94.79-94.82 (Sep 2020 high and 38.2% retracement). Initial support is 93.47-93.75 (9/28/21 breakout) and 93 (50-day ma). EURUSD has a broken neckline at 1.1605-1.1664, suggesting a decline to 1.1493-1.153, 1.4422, and 1.1255-1.13. Key initial resistance is 1.164-1.174 (50-day ma and breakdown). JPYUSD violated the bottom a 6-month trading below 0.8916-0.9012 (Mar/Jul 2021 lows) and is headed toward Apr 2019/Feb 2020 lows at 0.8899-0.8916.

S&P 500 Sectors – The RRG sector study continues to show a rotation away from S&P growth sectors to value and cyclical sectors. Technology (XLK) is the only sector residing in the Leading Quadrant. Healthcare (XLV) has slipped into the Weakening Quadrant joining Real Estate (XLRE) in a corrective phase. Communication Services (XLC) joins Consumer Staples (XLP), Industrials (XLI), and Materials (XLB) in the Lagging Quadrant. Energy moves up into the Improving Quadrant with Financials (XLF), Utilities (XLU), and Consumer Discretionary (XLY).

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