Stocks ended the week lower, as did the dollar index, in what has been a relatively quiet week for the markets, certainly regarding the recent volatility.
Several commodity markets continue to look as though they may be at the start of new uptrends, particularly the energy markets, and we just have to wait for the confirmation of these moves in the form of price breakouts. The coming months should deliver some excellent trading opportunities, particularly in the commodities markets.
The S&P 500 moved higher on Monday but then moved lower and closed the week down. The rally continues to look tired, and momentum continues to drop off, with the RSI moving back below 60 for the first time since February. The long-term trend remains down, but the market remains above both its 50 and 200-day moving averages, and a change of trend to up is within range. Whether we get there remains to be seen.
The Dax continued lower this week, moving back below its 50-day moving average. The RSI has fallen to test the 40 level, but due to its prior inability to clear the 60 level earlier in the rally remains in the bear range. That, combined with the long-term trend still being down keeps the focus on lower prices.
From last week: “This week saw the Nikkei break lower from a head and shoulders top. Traditional measuring targets suggest further declines to around the 15500 level, but quite likely lower.” The Nikkei moved lower and reached the head and shoulders target and exceeded it. For now, however, the market remains above support, but below both of its major moving averages. The long-term trend remains down, and the focus remains on a test of the critical February low.
Gold continues to find support from the 50-day moving average, and the RSI also remains in the bull range, moving higher from above the 40 level. The long-term trend remains up, and the focus remains on higher prices, with another test of the March high expected.
Silver, which ha remained consistently weaker than Gold of late also moved higher this week, regaining both its 50 and 200-day moving averages. The RSI remains in the bull range, having found support from above the 40 level, so a push higher and change of trend to up remains on the cards.
The energy markets have had a bullish week, and they continue to look as though they may have put in a bottom. Both Crude Oil markets (Light and Brent) moved above their 50-day moving averages this week. Brent’s RSI closed at 59.53, just a touch below the 60 level. A decisive move through 60 would indicate further strength, and a change of long-term trend is coming into range.
The dollar has mixed trading this week but remains in a long-term downtrend against everything but the British Pound. The dollar index made its lowest close on Friday since October last year, and the trend is still very much down. The index remains well below its moving averages, and the RSI is very much in the bear range, so the focus is towards lower levels over the coming weeks.
The dollar did manage to push the Pound lower, and the market appears to be finding resistance in the vicinity of its 50-day moving average. For now, the market is holding above key support, but that level could be tested this week. The RSI remains in the bear range.
Interest rate futures
Interest rate futures traded higher again this week. The 30 Year T-Bond continues to trade higher and remains above its rising 50-day moving average. We could yet see another test of the February high.
Similar price action is being seen in all markets in this sector at present, and the long-term trend remains up for interest rate futures across the board.