The past week has seen some big moves in commodities and interest rate futures but has also seen mixed trading in the currency and stock markets.
The long-term trends continue to turn bullish for commodities, although there are still numerous commodity markets in long-term downtrends. The long-term trend is also up for interest rate futures but is down for the dollar and the stock markets on the whole.
The S&P 500 rallied to a new high of 2110.75 basis September futures but has so far been unable to press higher. Thursday and Friday saw lower prices accompanied by significant volume, which suggests that the uptrend will come under further pressure next week.
The other three stock indices that we trade at LS Trader have all seen weakness. These three indexes remain in long-term downtrends and could breakout to the downside in the coming days and weeks.
There have been some big moves in the commodities markets this week. Soybeans rallied to a new high for the current move, but as with the previous Friday’s candle, showed significant selling to end the day near the low of the day. Soybean Meal was weaker than beans this week having been unable to make a new high. Price has actually consolidated this week but has seen some large daily swings. The long-term trend remains up for both of these markets, and the RSI is still very much in the bull range. There is a bearish divergence on both charts which shows a loss of momentum, but that does not necessarily mean that the trend is over, merely that we may be due a correction before seeing higher prices.
Sugar moved higher again this week in relatively volatile trade, and we remain focussed on our next target at the 21.00 area over the coming months. The RSI printed 80.88 on Thursday, its highest print since October 2010. However, there is no bearish divergence for the current move as the new momentum high was accompanied by a new high in price. Volume has also been high as the rally has continued, and we have seen six consecutive high volume days before a decline on Friday.
The energy markets had rallied to their highest price levels this year before pulling back towards the end of the week. Crude Oil closed just above its 200-day moving average, a level that will likely be tested this week.
Natural Gas made a significant rally this week, testing its 200-day moving average for the first time since November 2014. A change of trend to up is within range. Thursday’s RSI print of 73.40 was its highest since January 2014.
The currency markets have had a very mixed week which saw continued dollar weakness through the first half of the week followed by a recovery on Thursday and Friday. The dollar index printed a bullish engulfing pattern on Thursday and had had follow through to the upside, with the 50-day moving average being tested on Friday. The long-term trend remains down for the dollar, and the RSI is still in the bear range.
The big moves came in NZD/USD and GBP/USD. The kiwi gapped higher at Thursday’s open to reach its highest level in just over a year before pulling back on Friday.
Cable had a volatile week with large price swings in both directions. Friday’s low was a hard retest of the neckline of the head and shoulders bottom printed easier this year. The neckline was broken to the upside back in April, and the price has held above the neckline since. Friday’s weakness has seen the RSI test the 40 level, which along with Friday’s low will be a key level next week. The long-term trend is still down.
Interest rate futures
From last week; “The long-term trend is up across the board for interest rate futures, and we could see further breakouts this week.” The interest rate futures sector rallied as expected.
Also from last week: “The long bond …may now move higher to test the February spike high at 168.09. Based on the head and shoulder bottom pattern, where the neckline was broken on Friday, the target could run as far as 171.81.” The long bond rallied to and exceeded the 168.09 high and may now continue higher to our next target of 171.81.