Capital Markets Technical Outlook: 3-25-2021

Equities

  • SP-500: Bullish trend remains intact but under consolidation.
  • Nasdaq-100: Building support at 22-week moving average and consolidating. Trend has been neutral for the past 4 weeks.
  • VIX: Volatility has been subdued for now as this benchmark fear index is well below its 50 and 200 day moving averages. Trading at historical low, the trend is neutral.

Bond / Fixed Income

  • 10-Yr Note Yield: Although this key benchmark was flat today, it’s down @ -6.94% week-to-date. The trend is bullish but obviously encountering resistance at this level.
  • 30-Yr Bond Yield: Today’s 87 bps advance widened the spread between short-term and long-term rates, but the 30-Yr is still down -5.67% week-to-date. Like the 10-Yr, its trend is also up, but currently hitting resistance @ the Nov-2019 high.

Currencies

  • US Dollar: Today was a major breakout for the greenback as it has clearly broken downtrend and confirmed a continuation of the new bullish trend it initiated 4 weeks ago.
  • Euro FX: Only 4 weeks ago it closed below its 22-week moving average and began to consolidate for the next three weeks. Today it violated a key support level and changed from neutral to bearish.
  • Japanese Yen: The Yen has been trending in a bear market since mid-January-2021. It could test support @ the June-2020 low @ 0.91050 and should this fail, then its next price objective would default to the March-2020 lows @ 0.89520.a

Cryptocurrency Futures

  • Bitcoin: The trend is still bullish but going through a correction. Last week’s move above $61k marked a new record high and probably needs time to be psychologically digested. US Dollar strength and aversion for risk is also a factor at present.
  • Ethereum: Trend is bullish but also consolidating.
  • Tether: Continues to trend in a long-term neutral pattern since March-2020 with very little volatility.
  • Litecoin: Although the bullish channel remains intact, three out the last 5 weeks have resulted in failed rallies and lower highs. If support fails to hold @ the March-2021 low @ 153.6461, then it would confirm a new downtrend.

Commodities

Metals

  • Gold: The yellow metal safety haven is trading within a bearish channel and struggling not to breach the June-2020 lows @ 1672.80. The fact that it is trading below its 22 and 55 week moving averages and indicating an acceleration in downward momentum with a probability for the fast moving average to cross under the slower moving average is also not a good omen, not to mention the dollar’s newly found strength.
  • Silver: The poor man’s gold is showing a bit more resiliency, part of which may be explained by the demand for its industrial and manufacturing utilitarian value. Silver is consolidating while its bullish channel remains intact. One early warning signal, however, is that it now trade below its 22-week moving average.
  • Copper: While the red metal does not get nearly as much attention in the financial media as its two brethren, it is a very important economic barometer. Currently Copper prices are consolidating in a slightly overextended bullish trend. 3.9910 is a key support level and as long as it is maintained, the bull market will continue. Resistance is @ 4.3010.

Energy

  • WTI Crude Oil: Energy prices are undergoing a price correction but the trend is bullish. They are currently consolidating. Support @ 57 and resistance @ 66-67.
  • Brent Crude: The same analysis applies to Brent. However, support is @ 60-61 and resistance @ 68-68.50.
  • Natural Gas: Trading patterns are currently rangebound between @ 3.40 and 2.30. Trend is neutral, but caution should be heeded towards any bullish bias as NatGas has traded below its 22-week moving average for almost 4 weeks now and could test support @ its 55-week average.
  • RBOB Gasoline: The advancing trend in prices is beginning to consolidate as gasoline approaches peak levels that have historically been followed by corrections, e.g. April-2019 high @ 2.1335 and May-2018 high @ 2.2705. A reopening of the economy will be a good test for how much demand is capable of supporting prices at these levels or higher.

Grains

  • Wheat: Bullish trend has been broken and a price correction is in progress. Taking out support of the 50-day moving average is never a good omen and recent dollar strength also tends to be bearish for commodities. At best, one could see consolidation. If the weekly chart fails to maintain support @ the 22-week average, selling pressure may increase risk.
  • Corn: Completely contradicting my above dollar thesis about commodities is corn. Its trend is emphatically bullish. Although price movement was extremely hyperbolic , the 8 weeks of consolidation suggest that resistance is firm and any movement below 540-535 support levels would likely lead to testing psychological support levels @ 500 and ultimately 470.
  • Soybeans: The trend for soybeans also remains bullish but has been under consolidation for the last 4 weeks.

Real Estate

  • DJ Real Estate Index: The trend is up but also consolidating since last week. The 22-week moving average crossed above the 55-week average in mid-Jan-2021. This index also successfully tested support @ its 22-week moving average weeks ago.
  • DJ Home Construction Index: Investors do not seem to mind the rise in interest rates which have recently had a negative impact on mortgage applications being filed. As the pandemic lockdown recedes and eventually ends, seasonal patterns of high level activity and pent up demand could continue support this investment theme. The trend for Homebuilders is strongly bullish as it trades above last week’s closing price and will probably test last week’s record high.

Capital Markets Performance

asset class performance summary for equities, bonds, currencies, cryptocurrencies, commodities and real estate
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