The period of choppy, consolidating markets that have dominated most markets for the past few months could now be at an end. Friday saw some key breakouts in several markets and some decisive moves that may be the early stages of some decent trends in several markets.
The Nasdaq 100 posted new 15 1/2 year highs this week but as before, the breakout is still unconfirmed by the S&P 500. The S&P 500 came close to testing its all-time high posted earlier in the year but has as yet been unable to break through. The price action of the last few days reflects some indecision and has also seen momentum decline slightly. However, the RSI remains in the bull range.
The Dax has recovered to its highest level since mid-August, and the Nikkei has reached an 11-week high. The long-term trend remains down for both markets, and they continue to lag the US markets.
The energy markets have seen some fairly volatile trading, with strength during the first part of the week taking a few energy markets through short-term resistance, before reversing and ending the week lower. We could see the long-term downtrends resume this week.
There were some decent moves seen in the metals section, with Gold, in particular, making a decisive move to the downside, resuming the downtrend in the process. We should now see a test of the July low at a minimum over the next week or so. The other metals have also declined and are close to testing key support levels in the days ahead.
Wheat once again ran into price and RSI resistance, which has kept the trend down. There is price resistance at 531, and the RSI continues to reject the 60 level. If both of these levels can be exceeded, there is potential for a large up move over the coming weeks, with the next level of technical resistance almost $1 higher.
There have been numerous key moves in the currency markets this week. The dollar index broke through resistance to complete a change of trend to up; the Euro and British Pound both broke support, changing their respective trends to down, and the dollar broke parity against the Swiss France to reach its highest level since January.
One currency market that we have written about for several weeks, and which we viewed as potentially the key to unlocking the currency and other markets from their long consolidation, was USD/JPY. This week finally saw the two-month box range broken, and this resulted in a big move in this market as well as other related markets. This should result in a period of further dollar strength and large moves in many other markets over the weeks and months ahead.
Interest rate futures
The 30 year T-Bond has been the sole interest rate futures market not to confirm a change of trend to up. Therefore, as expected, it has been the first one to make its move to the downside, having fallen sharply this week. There is support around Friday’s low, which if broken could open the way to further declines towards the year’s lows around the 146.00 mark, so 600+ points below Friday’s close.
For now the long-term trend remains up for other markets in the sector, but that could change over the coming weeks if recent weakness persists.