Capital Markets Technically Speaking: 3-26-2021

Equities

  • SP-500: Bullish reversal is in play and now it needs to overcome resistance @ 3984 to confirm legitimacy.
  • Nasdaq-100: Bullish reversal is occurring but short-term trend is still bearish. Nasdaq-100 needs to overcome resistance @ 13311 to confirm downtrend is over.
  • VIX: Volatility still remains subdued and continues to trend lower for now as this benchmark index is well below its 50 and 200 day moving averages. Trading at near historical lows, the trend is neutral.

Bond / Fixed Income

  • 10-Yr Note Yield: Bullish reversal is indicating a resumption in rising rates.
  • 30-Yr Bond Yield: Similar patterns exist for the long bond. The trend remains bullish while consolidating. However, forthcoming economic data, especially the March-2021 Jobs report, if robustly improved, could send rates above 2.5% or higher.

Currencies

  • US Dollar: Despite today’s modest pullback in the dollar,  the newly initiated uptrend remains in place. Strong economic recovery upon reopening is irrefutable and should support a stronger dollar.
  • Euro FX: Conversely, the Euro FX continues its short-term bear market and could test support @ its Nov-2020 low.
  • Japanese Yen: The trend for the Yen is also bearish and indicates a high probability of testing support @ the Mar-2020 and Feb-2020 lows.

Cryptocurrency Futures

  • Bitcoin: Selling has ceased and another bullish reversal pattern has formed to establish a higher low on the recent pullback. This translates into continuation of the bullish trend.
  • Ethereum: A similar pattern exists for Ethereum but unlike Bitcoin, its most recent high is lower than the preceding high. Friday’s bullish reversal results in a higher low and suggests that further consolidation must occur. A breakout above the Mar-15-2021 high is mandatory to confirm a bullish continuation.
  • Tether: Trend is neutral and stable.
  • Litecoin: Since correcting from its Mar-15-2021 highs, Litecoin has successfully tested support @ its 50-day moving average this week and appears to be undergoing a bullish reversal. Another day or two of trading might be required to confirm this. After peaking in Feb-2021, it has also recorded a lower high on Mar-15-2021.

Commodities

Metals

  • Gold: Gold is trending lower but spent the entire week in consolidation. Any break above this week’s high or low will likely be followed by a sizable continuation move.
  • Silver: It is also consolidating and seems to be stuck in neutral while trading at the lower range of its bullish channel.
  • Copper: Dr. Copper recovered nicely with a bullish reversal. Its intermediate trend is still neutral within a longer-term bull market.

Energy

  • WTI Crude Oil: Oil prices rebounded stronger after yesterday’s pullback, but the best rating energy can earn for the week is neutral while it continues to consolidate and struggles to reclaim support @ lower range of its bullish channel.
  • Brent Crude: The same analysis applies to Brent.
  • Natural Gas: There is ample support for NatGas at these levels, which seems to be confirmed by this week’s consolidation since trending lower from the Feb-2021 peak.  A significant break below today’s close would be bearish and indicate an extreme shift in sentiment because market prices have not traded below this range in more than 6-months.
  • RBOB Gasoline: The advancing trend in prices continues, but whether Gasoline can surpass Mar-2021 highs is questionable. This level is close to its historical peaks, e.g. April-2019 high @ 2.1335 and May-2018 high @ 2.2705, and typically has been followed by sizable corrections. A full reopening of the economy might be just the catalyst to violate this traditional market behavioral pattern.

Grains

  • Wheat: The correction in wheat continues. Next target may be a test of support @ 592-590 range.
  • Corn: The bullish trend for Corn remains under consolidation, which implies strong overhead resistance since peaking in early Feb-2021.
  • Soybeans: The trend remains bullish but is also consolidating since peaking in early Mar-2021.

Real Estate

  • DJ Real Estate Index: Today gave us a new breakout after a period of consolidation and suggests continuation of the advance up to at least 1595.76, i.e. Feb-2020 high.
  • DJ Home Construction Index: Another record high for Homebuilders to place on the books. The trend is a bit overextended but could advance purely on momentum at this juncture with no overhead resistance. Economic recovery should provide a catalyst if interest rates do not rise too rapidly.

Capital Markets Daily Performance

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

Capital Markets Weekly Performance

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

Leave a Reply

Your email address will not be published. Required fields are marked *