Weekly Update – 2 February 2020 – LS Trader

Stocks

From last week: “US stocks rallied to new all-time highs again this week but did see some weakness as the week progressed, which culminated in a bearish engulfing pattern on both the S&P 500 and Nasdaq 100 on Friday. That could lead to additional weakness in the coming days. For now, the markets are above support, and the trend is up.”

The markets gapped lower on Monday, breaking short-term support. They ended the week and the month with a big down day on Friday. The long-term trend remains up, but not the short-term. Friday’s low tested the 50-day SMA.

We now have data in for the January Barometer, which states that as goes January, so goes the year. Historically, this indicator has an 85.5% accuracy ratio since 1950. If this barometer is correct, with January being a down month, so will the year be a down year. However, the long-term trend for global stocks is still up, and if one goes further back before 1950, the overall record is less impressive. Sticking with the trend is more objective.

Commodities

From last week on Palladium: “Prices closed lower on both Thursday and Friday, so although the trend is unquestionably up, the risk of a correction remains and is increasingly probable. Volatility has risen to a level not seen since July 2019.” Palladium did correct as expected, and did so sufficiently to violate support. The exit was our most profitable trade of the year to date.

Currencies

EUR/USD moved lower early in the week but recovered on Thursday and had a strong day on Friday. We now have the January high in at 1.1276 and the low in at 1.1030. Let’s see if the January effect holds for this currency this year.

Interest rate futures

Interest rate futures continued their recent rally, and may now go on to test their August highs. The long-term trend is up for the sector.

Leave a Reply

Your email address will not be published. Required fields are marked *