The Nasdaq 100 did break out to new all-time highs, and the S&P 500 also broke out of its range, with as we suggested last week. The dollar has also had the expected pullback. The long-term trend remains up for stocks and the dollar, down for interest rates and mixed for commodities.
From last week on the Nasdaq 100: “We did get the breakout and Friday saw very bullish price action combined with a decisive move above 60 on the RSI. The next target is for a retest of the March all-time high.” The Nasdaq reached and exceeded the March all-time high in line with our comments last week. However, there has been a pullback since and the market has closed back below prior resistance.
Also from last week on the S&P 500: “The S&P 500 continues to probe resistance on price and RSI, and a breakout to the upside could be seen this week.” The RSI did breakout from the range of the past two months and may now continue higher towards its own test of all-time highs.
Cotton did pullback early in the week as we suggested might happen, but the long-term trend is still clearly up and the second half of the week saw bullish price action and Friday’s close was the highest close since March 2014.
Copper has had a very bullish week, and price action has closed above what would have been the right shoulder of a potential head and shoulders top. The neckline of this pattern has been tested multiple times over the past several months and has held firm. This week’s price action means that the head and shoulders pattern is a failed pattern and that has bullish potential and if the upside breakout is successful would give upside targets in the 375 region.
The Dollar Index saw the expected weakness continue this week after sentiment had reached extreme levels. The pullback has taken the market back to fair value so we may see strength return over the next week or so. The long-term trend continues to favour the Dollar Index, as it also favours the Dollar against all the majors except for the Japanese Yen.
Interest rate futures
Interest rate futures have pulled back to the middle of the price range of the past few months. The long-term trend remains down for now. However, there are some potential bullish points which suggest a bottom may be in for now and that we might see further strength. These include the very bullish COT profile where commercials have huge long positions in all markets in the sector. Also, the RSI is back in the bull range. There is also bullish divergence on momentum indicators. This suggests that there is potential for further counter-trend rallies. However, these will be voided if the market prints new lows for the current move.