Technical Report for the Week of 12/13/21
Equities – The 10/22/21 breakout above the prior 9/2/21 record high of 4,545.85 still suggests 266.91- points or an SPX target at 4,824 (top of Mar/Apr 2021 uptrend channel) and above this to 4,813 (breakout target). A breakout above 4,824-4,843 also renders 248.71/346 points or an SPX target to 4,992.5 and 5,170. Initial support rises to 4,613-4,632 (12/7/21 gap-up), and below this to 4,546-4,573.5 (10/22/21 breakout and 50-day ma), 4,478-4,495 (bottom of channel and 12/3/21 low), 4,326 (200-day ma), and 4,279-4,306 (Sep/Oct lows).
Fixed Income – The 10-year minus 3-mo US yield spread has contracted and may retest key support at 1.14-1.16 (prior breakout). Above 1.50/1.46 and 1.62-1.73 confirms the resumption of the steepening curve. The long-end of the US treasury yields continues to diverge from the short-end, suggesting investors are expecting the Fed to increase rates sooner than anticipated. TNX continues to consolidate between key support at 1.129-1.131% (Jul/Aug 2021 lows) and key resistance at 1.69-1.765% (Mar/Oct 2021 highs).
Commodities – CRB stalled at 243.67-245 (38.2% retracement from 2008-2021 decline and 2004 breakout). An overbought condition led to consolidation to 218-221 (12/1/21 low and 30-wk ma), and below this to 213.5-215 (10-mo and 200-day ma). WTI Crude Oil shows a head and shoulders top pattern. Key neckline support is 61.56-62.43 (May/Aug/Dec 2021 lows). Key initial resistance is 77-78. Gold is now retesting key initial support at 1,721-1,750 (Jun/Sep 2021 lows). Key initial resistance is 1,837-1,837.5/1,879.5.
Currencies – US Dollar breakout above 94.52-94.82, confirming a 2-yr cup and handle/ saucer bottom and the next USD target at 96.57-96.94, 97.81-98.31, and 99.33-99.82. The key initial support rises to 95.53-95.54. EURUSD has a bearish flag/pennant pattern. Below 1.1186, confirms the breakdown. Above 1.1383-1.147 confirms breakout. JPYUSD is attempting to bottom above key support at 0.8657-0.8730 (Nov 2017, Oct 2018, and Oct/Nov 2021 lows). Key resistance is 0.8886-0.8956 (Nov/Dec 2021 highs and Sep 2021 breakdown).
S&P 500 Sectors – RRG sector study shows several S&P 500 sector rotations. Technology (XLK) rejoins Energy (XLE) and Consumer Discretionary (XLY) in the Leading Quadrant, with XLF and XLE losing price momentum. Financials (XLF) slip into the Weakening Quadrant. Real Estate (XLRE), Healthcare (XLV), Communication Services (XLC), Utilities (XLU), and Consumer Staples (XLP) remain in the Lagging Quadrant. Materials (XLB), and Industrials (XLI) continue to strengthen in the Improving Quadrant.
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