The past week has seen bullish moves in the stock indexes and the dollar. The Nasdaq 100 rallied to new multi-year highs, but as yet the move is unconfirmed by other U.S. stock indexes. The long-term uptrend for the dollar remains intact, and this past week has seen further dollar gains against most of the majors. The commodities markets remain mixed, as do interest rate futures.
The Nasdaq 100 put in a very convincing five-day rally to easily take out the June 2015 high. The rally was more than sufficient to see the RSI move above 60 and back into the bull range. Further rally may be seen, and we can look for support on any reversal at the level of the prior highs, around 4550. If the uptrend is good, 4550 should hold.
The S&P 500 also rallied this week, but has been weaker than the Nasdaq 100 and has so far fallen short of new highs. The RSI closed right on 59.99 this week so may move above 60 in the coming days. If it does, we should see a rally to new highs.
The Nikkei has also rallied but unlike the Nasdaq 100, there has been a considerable loss of momentum over the past few sessions, which has resulted in the RSI being unable to clear the 60 level. The long-term trend is still up.
Both metals and energies remain under pressure. Selling this week saw Gold complete a trend change of down to join the other three metals in a long-term downtrend. This move saw Gold drop below the key November 2014 lows and may now continue lower towards our next target at 1090.
Palladium remains by far the weakest of the metals, and it continues to trend nicely lower and may extend lower towards 575, the 2012 low. Silver saw some strength early in the week but has since turned lower, keeping the downtrend intact.
Crude fell to its lowest level since the 1st April and should head on down to test the March low which currently sits at 47.35 basis the back-adjusted continuous contract. Brent may also breakout to the downside this week and may also extend lower towards its low of the year posted back in January. RBOB remains by far the strongest market in the energy sector.
The grains markets have had very mixed weeks; corn, soybean meal and soybeans all made new highs for the current move but have since turned over and have given back some of the recent gains. Corn has been particularly weak and will likely test support in the coming days. Wheat has been weaker still and broke support earlier in the week.
The long-term dollar uptrend is getting back on track. Decent moves have already been seen against the commodity-based currencies of Australia and New Zealand, and this week saw dollar strength reach six-year highs against the Canadian dollar. With the exception of the British Pound, the dollar is in range of breaking out against all of the remaining currencies that we trade at LS Trader, and the uptrend may also resume in the dollar index over the coming week.
The Euro has shown quite a bit of weakness and may this week fall sufficiently to resume the long-term downtrend and looks set to move ultimately lower to test its March low. If this breakout occurs and is confirmed by an equivalent breakout higher in the dollar index, then we can look for continued dollar strength and a rally to above the year’s highs.
Interest rate futures
The long-term trends in the interest rate futures sector remain mixed. The 3-month Eurodollar and the 5-Year T-Note both remain in long-term uptrends, but the other three interest rate futures markets that we trade at LS Trader, the 30 Year T-Bond, 10 Year T-note and the Long Gilts are all still in long-term downtrends. The longer-term markets in this sector have seen some strength this week with the long bond rallying for four days. Other markets remain weak and within range of their recent lows.