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Technical Report for the Week of 12/04/23

Equities –SPX – Three technical developments signal intermediate-term recoveries: (1) Late Jan 2023 downtrend breakout and golden cross buy. (2) May and Jun 2023 breakouts. (3) 61.8% retracement from the Jul-Oct decline and the 11/14 gap-up and Jul downtrend breakout. Key resistance is 4,607-4,637, 4,818.62-4,914, and 5,159. Initial support rises to 4,541.25 (9/1 high), 4,422-4,459.5 (11/14 gap-up), 4,387 (Jul downtrend), 4,319-4,359.5 (50-day ma), and 4,245.5-4,286. Intermediate-term support is 4,104 (10/27/23 reaction low) and 4,053-4,063.

Fixed Income – 10-year minus 3-month yields (-1.21) rebounded to key resistance (-0.64 to -0.52). In 4 previous yield expansions, 3 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 – After achieving a 5.00% target, a 2-mo h/s top breakdown warns of correction to 4.019-4.021% (200-day ma).

Commodities – CRB – A 4-month head/shoulders top neckline breakdown below 271-274.5 warns of a near-term top and a retest of 261-264. Initial resistance is 279-282 (Apr/Jul 2023 highs/50-day ma). WTI Crude – Rally stalled at 95.03 (9/28/23) near the 2022 downtrend and Oct/Nov 2022 highs. The recent correction nears key support at 70-72.5 (Dec 2022 and Jan/Feb 2023 lows). Gold – The recent rally achieved all-time highs (2,095.70 – 12/1/23). Initial support rises to 2,015-2,019 (Mar, Jul, and Oct 2023 highs) and 1,956 (50/200-day ma).

Currencies – USD – The 11/2/23 gap-down and the violation of the 50-day ma (105.5) has led to a decline to key support at 101.49-102.2 (Jun/Aug 20230 lows and the 61.8% retracement). EURUSD – The oversold rally from key support at 1.0448 stalls near pivotal resistance at 1.08-1.10 (200-day ma and Feb 2023 highs). Initial support is 1.082/1.068. USDJPY – Rally stalled at 151.91 (Oct 2022 highs), prompting a decline to 145-146 (2023 uptrend and the Aug 2023 breakout). Initial resistance is 149.5-150.16.

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

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