The past week has seen an increase in volatility in the currency markets and in the stock indexes. The dollar in particular has made some large swings this past week but has ended the week lower. The long-term trends still mostly favour the dollar but this may be going to shift soon. Stocks recovered initial weakness and rallied to new highs for the current move on Friday. The long-term trend for US stocks remains up.
The S&P 500 rallied to new highs for the current move and the highs of the year posted in early April now look to be a realistic target. The Nasdaq 100 also hit new highs for the current move and the target now will be the highs of the year.
The most bullish daily move came from the Dax on Friday, which posted a tall white candle to hit new highs for the current move. The index did run in to resistance around 6890 but will likely have another go at that level this week. If it can clear resistance then 7000 will be the next focus point and possibly the highs of the year around 7200.
The Nikkei has continued to grapple with the 50 day MA and remains the weakest of the indices that we trade at LS Trader. The long-term trend is still down.
Gold continues with its sideways consolidation within the $100 box range. As before, a break out of this range may lead to a move of around $100 in the direction of the breakout. The long-term trend is still down.
The energy markets have been mostly bullish, which is counter to the long-term trends, all of which are down with the exception of Natural Gas. The biggest move came from no leaded gas, which advanced 4.8% for the week. No leaded gas continues to lead the sector and will likely be the first market to give a change of trend to up should the current strength continue.
The grains markets remain bullish and are still not that far from the all time high prices that a few of the markets hit a couple of weeks ago.
The largest down move for the week came from Lean Hogs, which ended the week lower by some 6.74% to reach new lows for the October contract.
The forex markets have seen a sharp increase in volatility with large daily swings being seen in many markets. On balance the long-term trend still favours the dollar but this is beginning to shift, especially against the commodity based currencies of Canada, Australia and the New Zealand dollar, the latter of which is on the verge of a change of long-term trend to up.
The Euro did press higher, almost exactly to the 50 day moving average as we suggested may happen in last week’s update. The long-term trend is still down.
Interest rate futures
The interest rate futures sector saw further weakness this past week, especially on Friday. However, as we wrote last week the long-term uptrend still remains in place across the sector and further weakness will be required for a change of trend to down.