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Technical Report for the Week of 6/15/20

Updated: Jun 19, 2020

Technical Summary

Equities – SPX declined 1,201.66 points or -35.41% from 2/19/20 to 3/23/20. Just as quickly as it has fallen SPX has appreciated 1,041.27 points or +47.51% trading recently to a high of 3,233.13 (6/8/20). Although a return to its all-time high (3,393.52) is still possible, the recent violation of Mar 2020 uptrend (3,124) and a daily bearish island reversal on 6/11/20 warns of a SPX consolidation toward key initial support at 2,984-3,014 (6/12/20 low, top of 5/26/20 gap up, and 200-day ma), and below this to 2,946-2,957 (5/26/20 gap up breakout), and then to 2,835-2,903 (38.2% retracement from Mar-Jun 2020, 5/18/20 gap up, and the 50-day ma). The narrowing of the spread (110.64) between the 50-day ma (2,903) and 200-day ma (3,014) may help to signal the next major SPX directional trend change.

Fixed Income – US Treasury yields have stalled near key resistances. For instance, the 30-year Treasury yield (TYX) rallied to major resistance at 1.80-1.94% before failing. Key initial support rises to 1.37-1.40%, and below this to 1.25%, and then to 1.13-1.19%. The 10-year Treasury yield (TNX) has also broken out above a 3-month trading range (0.723-0.784%) but this rally has encountered key initial resistance at 0.989%. Failure to breakout hints of a pullback toward key initial support at 0.648-0.651%, and below this to 0.543-0.568%, and then to 0.398%.

Commodities – CRB Index has rallied strongly from key support at 101.48 (4/21/20) and is now fading as it nears medium-term resistance at 144.67 (50% retracement from Jan-Apr 2020 decline). Key initial support is 133.5, and below this to 128, 124-125.5, and then to 1118.5-121. WTI Crude Oil is stalling near major resistance at 41-43 (Mar 2020 head/shoulders top breakdown, 61.8% retracement from the Jan-Apr 2020 decline, and the pivotal 30-wk ma). Key support rises to 29-31 and then to 26-28.5. Gold continues to consolidate via a 3-mo triangle pattern between 1,666-1,672 (support) and 1,755-1,789 (resistance).

Currencies – Increased volatilities have returned to the currency markets as key technical tests are developing. USD is rebounding from key support at 95.71-96.02 (Dec 2019 and Jun 2020 lows). It is now headed toward a test of key resistance at 98.34-99.22 (50-day and 200-day ma). EURUSD has rallied to key resistance at 1.140-1.1422. Failure to breakout warns of a consolidation to key initial support at 1.096-1.102 (50-day and 200-day ma). JPYUSD has stalled at key resistance along 0.9365-0.9383 (Jun and Oct 2019 highs). Key support rises to 0.923-0.929 (50-day and 200-day ma).

S&P 500 Sectors – In the past 8 weeks ending on June 8, 2020, SPX has been experiencing several key sector rotations. Healthcare (XLV -3.2%), Technology (XLK 11.4%), and Consumer Staples (XLP -3.9%) have all slipped into the Weakening Quadrant. This suggests near-term corrective phases. Communication Services (XLC 11.8%) and Consumer Discretionary (XLY 11.0%) retain their leadership roles within the Leading Quadrant. Energy (XLE 17.3%), Industrials (XLI 9.1%), and Materials (XLB 9.5%) have moved into the Improving Quadrant. XLB is close to moving into the Leading Quadrant. Utilities (XLU -3.1%) continues to decline within the Lagging Quadrant. Real Estate (XLRE 2.9%) and Financial (XLF -6.4%) have begun to turn higher within the Weakening Quadrant.

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