The stock market ended the week lower but closed well above the lows. The Dollar Index ended the week almost flat but had been higher during the week. The long-term trends remain intact, up for stocks, down for the dollar and interest rate futures, and mixed for commodities.
Four days of selling in the S&P 500 ended on Friday as the market bounced nicely from the lows of the day. Volatility continues to expand in the stock market as it has throughout February. The long period of low volatility in stocks appears to be over. It is interesting to note that the ATR in the S&P 500 began the year at 17. On Friday it ended the week at 69, so the current daily range in the S&P 500 is now four times what it was at the start of January, just two months ago.
From last week: “The Nasdaq 100 leads the way and may test all-time highs this week, with a breakout to new all-time highs a real possibility.” The Nasdaq 100 began the week with strength did not make new highs as a bearish engulfing pattern printed on Tuesday, and the market headed lower until Friday, where support was found in the vicinity of the 50-day moving average. The Nasdaq remains the strongest of the stock indices and new highs are still a possibility and could be seen this week.
The Dax remains the weakest of the four indexes we trade but bounced from support on Friday in concert with other global stock indices. If last week’s low is taken out, there is considerable room for further declines. One possible target could be the 200-week moving average, currently at 11037.
Gold is roughly in the middle of its recent range between circa 1370 and circa 1240. It is also between its 50 and 200-day MAs, both of which are flat. This indicates, along with a neutral RSI, no trend in the short-term. However, a break from this range could yield a large move in the direction of the breakout, but we may need to wait a few weeks for either to occur.
Silver tested support this week but narrowly held on. A downside breakout could be seen thus week.
Soybean Meal had another bullish week, gaining 3.38% in spite of some weakness on Friday. Price briefly crossed the 400 level for the first time since July 2016. Soybeans was also bullish and experience a weak day on Friday with a long upper wick as well.
The Euro’s price action on Wednesday and Thursday may turn out to be a bear trap as medium-term support was violated and then quickly reversed, with price regaining the 50-day moving average. The trend remains up for the Euro in spite of recent dollar strength.
USD/JPY resumed its downtrend this week having earlier broken out of a 10-month rectangle. Price targets from that suggest that we may see further weakness down towards the 100 level.
USD/CAD briefly cleared resistance on Friday but has yet to make any upside progress. If it can make a decisive breakout this week, there is plenty of room for further rally.
Interest rate futures
The trend remains down for interest rate futures in spite of some midweek strength. Friday saw a reversal which kept the downtrend for the shorter-term markets intact. The 10 Year T-note and 30 Year T-Bond may both head down to test their recent lows.