Equities –SPX – Three gap ups (11/1, 11/2, and 11/3/23) have ignited the 10/27/23 oversold rally toward pivotal resistance at 4,393.5-4,419, corresponding to the Oct 2023 highs, 9/21/23 gap-down, 61.8% retracement from Jul-Oct 2023 decline, and the top of the Jul 2023 downtrend channel. The outcome of the oversold rally will help decide three possible outcomes: Scenario 1 (Bullish) – Rally to 4,607, 4,683, and 4,724. Scenario 2 (Neutral) – Trading range between 4,104-4,114 and 4,393.5-4,419. Scenario 3 (Bearish) – Selloff to 3,809-3,814.
Fixed Income – 10-year minus 3-month yields (-0.92) stalled at key resistance (-0.64 to -0.52). 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 (5.33) have exceeded the Feb 2007 highs (5.26), but the 2-year (5.07) is still short of the 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 – Recent pullback nears key support at 271-274.5 (Jul 2023 breakout/Aug/Oct lows/200-day ma) Key resistance is 282-283 (Jul, Aug, and Nov 2023 highs and 50-day ma). WTI Crude – Rally stalled at 93.5-95.5 (Mar 2022 downtrend and Oct/Nov 2022 highs). The correction nears key support at 75-76 and below 70-72.5. Gold – The pullback from resistance at 2,011-2,019 (Mar, Jul, and Oct 2023 highs) nears key support at 1,938.5-1,948 (50-day/200-day ma). Additional support is 1,908.5-1,922 and 1,901.
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 104.51-104.61 and 102.85-103.36. 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 147.26-149 (50-day ma) and 145-146 (Aug 2023 breakout).
S&P 500 Sectors – RRG study continues to show improvements. Communication Services (XLC) and Energy (XLE) remain in the Leading Quadrant, with XLC strengthening. Technology (XLK) improves within the Weakening Quadrant. Consumer Discretionary (XLY) joins Industrials (XLI) and Real Estate (XLRE) in the Lagging Quadrant. Consumer Staples (XLP), Utilities (XLU), Healthcare (XLV), Materials (XLB), and Financial (XLF) remain in the Improving Quadrant, with XLU and XLP improving and XLV, XLB, and XLF weakening.
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