Equities – SPX is still projected to rally toward 3,928-3,967 (near-term), 4,079-4,136 (medium-term), and then to 4,595 (long-term). However, the October 2020 and Mar 2020 rallies of 19.70% and 76.60%, respectively have created an overbought condition. The failure of SPX to clear above the top of its 2-plus month uptrend channel between 3,745-3,912 and the recent violations of the 50-day ma (3,716) and the bottom of its uptrend channel (3,745) warns of consolidation. The key initial support is at 3,627.5-3,636.5 (38.2% retracement from Oct 2020-Jan 2021 rally and the Dec 2020 lows), and below this to 3,552-3,578 (channel breakdown downside target and the 50% retracement), and then to 3,477 (61.8% retracement). The key intermediate-term support remains at 3,350 (200-day ma) and then 3,233.94 (10/30/20 low). Initial resistance falls toward 3,735-3,750 (extension of channel breakdown), and above this to 3,836.83-3,847.78 (1/27/21 gap down), and then to 3,870.90 (1/26/21 all-time high).
Fixed Income – TYX and TYX continue with their August 2020 uptrend channels between 1.71% and 2.07%, and 0.987% and 1.275%, respectively. Recent failures to clear above the top of their channels have led to consolidations toward key initial supports at 1.749-1.767% (TYX) and 0.969-0.987% (TNX).
Commodities – CRB Index continues to test intermediate-term resistance at 177 (2018 downtrend). A breakout confirms the next rally to 200-207. Initial support rises to 166 (50-day ma) and then 143-147 (200-day ma). WTI Crude Oil is nearing key resistance at 54-56.5 (late-Nov 2020 breakout target and the 2018 downtrend). Initial support rises to 46-49 and 43-44. Gold has failed to breakout above key resistance at 1,966.10, prompting the recent consolidation. A trading range is developing between 1,767-1,801 and 1,962.5-1,966.
Currencies – US Dollar (USD) achieved its h/s top breakdown target (89.17 - 1/6/21). A falling wedge pattern hints at a bottom. Above 90.75-91.75 confirms a breakout. Key support remains at 89.15-89.17. EURUSD has also achieved targets of 1.235-1.2419. Failure to breakout above the top of its 2020 uptrend channel coupled with a 2-mo h/s top warns of consolidation to key support at 1.2012-1.212. JPYUSD is correcting as evidenced by a negative outside day/week (1/6/21 and 1/4/21) and 50-day ma and 2020 uptrend (0.9575) breakdown.
S&P 500 Sectors – In the past eight weeks ending on January 25, 2021, the S&P 500 RRG sector study shows technical market weakness. Energy (XLE) and Financial (XLF) remain in the Leading Quadrant but are both losing price momentum. Communication Services (XLC), Industrial (XLI), Consumer Discretionary (XLY), Technology (XLK), and Materials (XLB) continue to correct as they all reside in the Weakening Quadrant. The defensive sectors such as Consumer Staples (XLP), Real Estate (XLRE), and Utilities (XLU) remain in the Lagging Quadrant. However, XLRE is showing technical signs of improving. Healthcare (XLV) is the only S&P sector in the Improving Quadrant.
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