The long-term trend remains up for US stocks and the US dollar. The trend for interest rate futures remains down but is on the verge of changing. Commodities remain in a long-term downtrend with only a few exceptions. The energy sector, which has been the strongest of the commodities for much of this year is possibly on the verge of breaking down and a trend change.
The S&P 500 has had a mixed week. Weakness was seen during the first half of the week before a reversal from Wednesday’s lows. The trend remains up, and we may yet see another test of all-time highs.
From last week: “The Dax has seen continued weakness this week and may be headed lower to test the June lows. The RSI has been unable to get above the 60 level and remains in the bear range.” The Dax did test key support, which has so far held. It’s likely that we will see another test of support this week with a breakdown and resumption of the long-term downtrend on the cards.
The Nikkei displays a possible inverted head and shoulders, which, if completed, would change the trend to up.
The metals markets have seen continued weakness this week with all four markets that we trade falling to their lowest level of the current move.
The energy markets have also continued their recent decline. For now, the entire sector remains in a long-term uptrend, but that could change in the coming weeks. Brent Crude is making a series of lower lows and lower highs and has also broken through the bottom of an almost 4-month rectangle, so far without follow-through.
The dollar index rallied to its highest level since June 2017 this week but did print an ugly candle on Wednesday with downside confirmation following on Friday. Sentiment remains extremely bullish so we may see some additional weakness this week. The long-term trend remains bullish and continues to favour the dollar across the board.
Interest rate futures
The long commercial position on the COT report reached a new record net long this week with speculators recording a new record net short position. Such a profile, as we have written in recent weeks often resolves itself in favour of the commercials. For now, the long-term trend remains down but could change to up with additional strength. The head and shoulders bottom pattern continues to form.