Risk appetite has returned to the markets after a week of volatility but some safe haven markets such as gold and the Swiss franc are still in demand, so investors still remain undecided on future price moves. Stocks resumed the long-term uptrend having bounced nicely off short term support levels early in the week and the dollar has resumed the long term downtrend, falling virtually across the board over the past week. Commodities have been mixed but have benefited from a weaker dollar and this has seen Gold hit new all time highs once again.
We wrote last week that if support around 1290 to 1300 holds that we may see a test of 1340 on the S&P 500 and that’s exactly what happened. The S&P 500 fell to 1291.3 before finding support and then moving higher before closing the week at 1341. The next target will be 135 4.5 resistance and then 1361.6, the highs of the year on the September contract. The current phase must be considered bullish as long as 1290 support holds.
The Nasdaq 100 also had a good week and reached its highest level in a decade, perhaps significantly closing above the highs of this year. Further out we may see a continuation higher towards 2565.
Crude moved higher again but has still been unable to clear the $100 level on a closing basis. This week saw a rollover into the September contract, which briefly edged above $100 intra day but closed the week out at $99.87. Some resistance at $100 is to be expected but a close above $100 may open the way for $104.
Both Gold and Silver were higher again with Gold going on to make new all time highs. December gold posted a new all time high at $1612.3 on Tuesday before pulling back slightly, but still ending the week abov e $1600 and with a new all time high weekly close. Silver also pushed higher and retook the $40 level, which completes a 50% retracement of the massive decline seen back in early May.
Cotton had another down week and closed below the 100 level for a second consecutive week. As we wrote last week, the next major support point comes in around 80 and that will be the next target.
The dollar index ended moved lower and pierced support at 7440. The index also broke below and upward sloping trendline that has been in place for several weeks and may now target the bottom of the wider range at 7330.
Recent weakness for both the Pound and the Euro came to an end against the dollar this week as dollar weakness took effect across the board. The dollar was also lower against the Yen and may push lower towards the March lows.
The best performing currencies continue to be the Swiss Franc and the New Zealand dollar, both of which are near to all time highs. This is an unusual position as both of these markets do not as a rule perform all that well together as one is considered higher risk and the other a safe haven. This is a clear indication of the current indecision in the markets.
Interest rate futures
Interest rate futures drifted lower this week having failed to push on and make further new highs. The trend still remains up but the highs of the year will need to be taken out to prevent further weakness.