Technical Report for the Week of March 15, 2021
Equities – SPX Index continues with its bullish Nov 2020 uptrend channel as it nears another key test of the Feb/Mar 2021 all-time highs at 3,950.43-3,960.27. A convincing breakout above 3,960.27 reaffirms the next SPX rally to 4,028 (top of the Nov 2020 uptrend channel), and above this to 4,177.5 (breakout above 3,950-3,960 target). SPX has rallied sharply over the past year. However, the index is only moderately overbought, with an RSI reading of 58.85. Initial support rises to 3,800-3,841 (50-day ma and the bottom of the Nov 2020 uptrend channel), and below this to 3,677-3,723 (1/29 and 3/4/21 lows and the 38.2% retracement from Oct 2020-Feb 2021 rally). Violation here warns of the start of a deeper and more extensive correction.
Fixed Income – The 10-year (TNX) and 30-year treasury yields (TYX) continue to trend higher. The next key resistance is near their respective Sep, Nov, and Dec 2019 reaction highs at 1.903%, 1.943%, and 1.935% (TNX), and 2.378%, 2.427%, and 2.389% (TYX). Will TYX begin to peak there? Also, the ability of TYX and TNX to breakout above the top of their Aug 2020 uptrend channels render targets to 2.44-2.55% (TYX) and 1.66-1.68%, and then to 1.903-1.971% (TNX). Initial supports rise to 2.15-2.23% and 1.915-1.991% (TYX) and 1.37-1.44%, 1.187-1.245% and 1.115% (TNX).
Commodities – CRB Index has cleared above its 2018 intermediate-term downtrend (178). The breakout suggests CRR rally toward 202-207 (2008 highs). Initial support rises to 188-190.5, 182-183, and then to 176.5-180. WTI Crude’s breakout above 57 (2018 downtrend) is now challenging key resistance at 65.65-66.60 or the Apr 2019 and Jan 2021 highs. Initial support rises to 56-58 and 45-47. Gold continues to test pivotal support at 1,666-1,695, coinciding with the bottom of the channel, Apr/May/Jun 2020 lows, and the 61.8% retracement from the Mar-Aug 2020 rally. Key initial resistance is at 1,767-1,801.
Currencies – US Dollar (USD) continues to show technical signs of bottoming via its two higher-low patterns (i.e., Feb 2018/Jan 2021 lows at 88.15/89.12 and 1/26 and 2/25/21 lows at 89.17/89.68). The key support remains at 90.5-91.5, 89.17-89.68, and then 88.15-89.17. EURUSD has broken out above a 12-year downtrend (1.19-1.20). However, a 5-year head/shoulders top remains intact. Support is 1.181-1.186 (10-wk ma, and 200-day ma, 2008 downtrend). JPYUSD is testing key support at 0.9137-0.9226 (bottom of 2016 uptrend channel and 30-mo ma). Initial resistance is 0.947-0.951 (50-day and 200-day ma).
S&P 500 Sectors – In the past eight weeks ending on March 8, 2021, sector rotations have become increasingly volatile. Communication Services (XLC), Energy (XLE), and Financial (XLF) continue to rise in the Leading Quadrant. Industrial (XLI), Consumer Discretionary (XLY), and Technology (XLK) have joined Consumer Staples (XLP) and Utilities (XLU) in the Lagging Quadrant. Real Estate (XLRE) and Healthcare (XLV) remain in the Improving Quadrant. However, Healthcare has weakened and may soon slip into the Lagging Quadrant. Materials (XLB) is the sole S&P sector in the Weakening Quadrant.
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