The S&P 500 rose to new all time highs yet again (yawn!), an event that seems to happen every week at least once! Friday’s intraday print at 2079 basis the December 14 e-mini contract is the latest all time high. The dollar is also on the move higher and commodities continue to experience an increase in volatility, which was particularly evident in the metals markets this week. The energy sector continues to collapse and the extended downtrends seen in these markets has been responsible for huge gains for the LS Trader system which is once again at new highs for the year and new highs since the system’s inception on data dating back to 1983.
As mentioned above, the S&P 500 rose to new all time highs but the move was unconfirmed by new highs for the Nasdaq 100, which for a change failed to exceed the highs printed during the prior week. 3 doji patterns have been seen consecutively on the 100’s daily chart, which indicates a loss of upside momentum, and state of almost total indecision in the near-term as the Nasdaq consolidates just below recent multi-year highs.
The Dax had a very volatile couple of days as a spike high to new all time highs was seen on Thursday followed by a sharp reversal lower in literally minutes. The Dax then gapped higher at the open on Friday and went on to make a new all time high close, just a few points below the intraday spike high printed Thursday. The fact that bears could not keep downside momentum going on Thursday suggests further strength may be seen during the week ahead.
The Nikkei continues to benefit from yen weakness and this week reached its highest level since October 2007, which correlates to the lows that the yen has printed for the same period. The next level of technical resistance comes in at 18715.
One of the most volatile short-term moves in recent times occurred this week in silver, which saw the precious metal drop to new lows for the current move in the early hours on Sunday night. Silver dropped to its lowest level since August 09 before reversing violently higher, leading to a large whipsaw trade. Such moves are pretty rare and often come at key turning points. Although the trend is still down and a reversal is as yet unconfirmed by price action, it is possible that we may have seen the low for this year and may be due a rally that could last a couple of months. However, with the trend remaining down and with the RSI still remaining in the bear range (20-60), the longer-term focus still remains towards lower levels. Time will tell.
Similar price action was also seen in gold, but the yellow metal had not fallen to new lows when the reversal kicked in on Sunday night. The trend for both precious metals, and indeed the entire metals sector is still down.
As mentioned above, the biggest trends are still in the energy sector where the markets continue their long established downtrends and have printed new lows for the current move once again this week. These trends continue to be extremely profitable for the LS Trader system and currently have a huge 13,740 spread betting points in cumulative profits between the 4 markets, which are crude oil, Brent crude, heating oil and no leaded gas.
Further dollar strength was confirmed with the Euro falling to new lows for the current move and the dollar index reaching new highs. The Japanese yen continues to collapse and this week fell to its lowest level against the dollar since October 2007. The moves in the currency markets at present are all about the dollar bull market and the Japanese yen bear market. The current dollar run has taken the dollar index to its highest level since March 2009, which is where the current stock market rally began. The fact that the dollar is still rallying with stocks also at new highs shows how strong the dollar is. Many of the currency trends are mature, but so far there is no evidence of these trends coming to an end. There will of course be corrections along the way but the longer-term focus is higher for the dollar.
Interest rate futures
December has begun in mixed fashion for interest rate futures. The rally of the past 2 weeks ran out of steam and a reversal has been seen to take the market back into its sideways consolidation, which has been in effect since the decline from the mid-October high. The trend still remains up across the sector but weakness particularly in the shorter-term interest rate futures is now appearing. All markets are still range bound and none have broken out from their respective consolidations.