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Technical Report for the Week of 11/20/23

Equities –SPX – 11/14/23 gap-up breakout above 4,393.5-4,414 (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) renders 4,521-4,567.5 (9/1/23 negative outside day high and 8/2/23 gap-down) and above 4,607-4,637 (Mar 2022 high and 7/27/23 negative-outside day reaction high), 4,721-4,744 (Jul 2023 channel breakout target and Nov 2021 high), and 4,818.62 (1/4/22 all-time high). Initial support rises to 4,410-4,459 and below 4,393.5, 4,320-4,339, and 4,246-4,266.

Fixed Income – 10-year minus 3-month yields (-1.06) stalled at key resistance (-0.64 to -0.52). In 4 previous yield expansions, three led to recessions and bear markets, and one (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 shy of the Jun 2006 highs (5.20), implying one more Fed rate hike. TNX – Breakout above 4.333-4.362% suggests 5.00% (achieved). 2-mo h/s top warns of correction to 4.50-4.56%/4.33-4.36%.

Commodities – CRB – A 4-month head/shoulders top signals of neckline support at 272-274.5 (Aug, Oct, and Nov lows and the 200-day ma). Initial resistance is 279-282 (Jul, Aug, and Nov 2023 highs and 50-day ma). WTI Crude – Rally stalled at 95.03 (9/28/23) near the 2022 downtrend and Oct/Nov 2022 highs. Correction nears key support at 70-72.5 (Dec 2022 and Jan/Feb 2023 lows). Gold – The pullback from key resistance at 2,011-2,019 (Mar, Jul, and Oct 2023 highs) rebounds from key support at 1,941-1,949 (50-day/200-day ma).

Currencies – USD – The Jul-Oct 2023 recovery failed at key resistance (107-109). The 11/2/23 gap-down and the violation of the 50-day ma (105.5) warn of a retest of support at 102.86-103.42 (200-day ma). EURUSD – The oversold rally from key support at 1.0448-1.0516 nears pivotal resistance at 1.08-1.09 (200-day ma and extension of 2023 channel breakdown). USDJPY – Recent rally stalled at key resistance (151.95 - (Oct 2022 high). Initial support rises to 147.26-149.5 (50-day ma) and below 145-146 (Aug 2023 breakout/channel).

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

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