Technical Report for the Week of 11/15/21
Equities – SPX continues with the Mar/Apr 2021 uptrend channel between 4,374 and 4,749. The 10/22/21 breakout above the prior 9/2/21 record high of 4,545.85 suggests 266.91- points or an SPX target at 4,813, near-term. An accelerated breakout above the top of the Mar/Apr uptrend channel (4,749) renders a target at 5,124, intermediate-term. Initial support rises to 4,631 (11/10/21 low), and below this to 4,546-4,567 (10/22/21 breakout and the middle of Mar/Apr channel), and 4,465-4,496 (50-day ma and the 10/19/21 gap-up breakout).
Fixed Income – The 10-year minus 3-mo US yield spread has contracted to key initial support at 1.43-1.44 (50-day/200-day ma). A rebound signals the next rally to key initial resistance at 1.62-1.73 (Mar and Oct 2021 highs). The long-end of the US treasury yields has contracted more than the short-end of the yield curve. Does this imply bond investors are expecting the Fed to increase rates sooner than later? TNX is rebounding from key initial support at 1.46-1.49% (50/200-day ma). Key initial resistance is 1.691-1.77% (2021 highs).
Commodities – CRB surge above 233.5-236 led to a rally to key resistance at 243.67-245 (38.2% retracement from 2008-2021 decline and 2004 breakout). Support is 231-232 (50-day/10-wk ma) and 221.25/213.5-217.5 (9/15/21 breakout and 10-mo/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 77-78 and 69-72. Gold’s breakout above 1,837-1,837 hints at 1,1919-1,941/1,962.5-1,966. Initial support is 1,837-1,838/1,780-1,792.
Currencies – US Dollar has broken out above 94.52-94.82, confirming a 2-yr cup and handle/ saucer bottom and next USD rally to 96.56, 97.81-98.31, and 99.33-99.81. Initial support is 93.27-93.69. EURUSD failed at key resistance at 1.664-1.17, prompting a retest of support at 1.14-1.1422. Violation warns of the next decline to 1.1255-1.13/1.1146-1.1168. JPYUSD continues to be range-bound between 0.8719-0.8730 (Nov 2017/ Oct 2018/Oct 2021 lows) and 0.8899-0.892 (50-day ma/Apr 2019/Feb 2020 lows).
S&P 500 Sectors – The RRG sector study continues to shift in favor of value, cyclical, and commodity sectors. Energy (XLE), Consumer Discretionary (XLY), and Financial (XLF) remain in the Leading Quadrant, with XLF losing price momentum. Technology (XLK) improves within the Weakening Quadrant, suggesting a correction is ending. Real Estate (XLRE) joins Healthcare (XLV), Communication Services (XLC), Utilities (XLU), and Consumer Staples (XLP) in the Lagging Quadrant. Materials (XLB) and Healthcare (XLI) move into the Improving Quadrant.
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