Weekly Update – 7 June 2020 – LS Trader

Stocks

The Nasdaq 100 broke out to new all-time highs on Friday and is the first of the global stock indices to complete their recovery. Of potential significance is the fact that the Nasdaq closed above prior resistance of the February high, which is also a weekly closing high. Volatility is at a relatively subdued level for an all-time high, so this rally could still have legs. There will be many market participants who have remained on the sidelines since the February decline, who will be looking for a way to get on board. There will be others that want to fade the breakout. This week could be explosive.

Commodities

Gold had a bad week, closing below its 50-day moving average and the low of the hammer pattern printed two weeks ago. Price ended the week at a 2-month low. The trend remains up.

Currencies

From last week on the Dollar Index: “If last week’s low is taken out, we may see a cascade of selling, potentially down to the March low, which is the next structural level of support.” The Dollar did take out the low and moved sharply lower. Price action on Friday could be stopping action, and a move above Friday’s high may lead to a short-term rally. The long-term trend remains up for now.

Interest rate futures

From last week: “Volatility continues to contract in the interest rate futures markets as price continues to coil. The eventual breakout from this range could be substantial, and it could be to the upside or the downside.” The market finally broke out of the range but did so to the downside. However, for now, at least, the long-term trend is up.

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