Weekly Update – 21 July 2019 – LS Trader

Stocks

Both the Nasdaq 100 and the S&P 500 made new all-time highs this week, but both corrected lower to end the week down.

The RSI has dipped below the 60 level but remains very much in the bull range, and the long-term trend remains up. However, the close below the April high, which should have held firm due to change of polarity, does put a question mark against the current trend.

Commodities

Gold broke out to the upside from the triangle to print its highest price in 6 years. Silver also had a strong week, rallying to its highest level in over a year.

Palladium, which has been the strongest of the metals of late, and the only one to hit new all-time highs this year, had a corrective week and saw prices break below short-term support.

Currencies

The dollar has had a mixed week. The Dollar Index ended the week slightly higher but remains within a trading range. Some of the majors have shown some strength against the dollar, with both the Australian and New Zealand dollars reaching their highest levels since April.

Meanwhile, at the other end of the scale, the British Pound fell to its lowest level since April 2017 before posting a mild recovery. As with the Pound, the Euro remains in a long-term downtrend but is currently in a trading range.

Interest rate futures

The trend for interest rate futures remains up, and some strength has been seen this week. The current technical picture suggests that the rally is not done and that we will see new highs above the highs printed at the start of the month.

Weekly Update – 14 July 2019 – LS Trader

Stocks

Both the S&P 500 and Nasdaq 100 made new all-time highs this week, as well as all-time high weekly closes. The bull market remains intact, and the long-term trend is indisputably up. The RSI remains in the bull range. As expected during this time of year, volume has declined as the rally has persisted, and volatility is waning. If these markets can hold above the breakout levels on a closing basis, that may form a platform for considerable further rally.

Commodities

Palladium made new all-time highs again this week but did come off slightly by Friday’s close. Gold continues to consolidate above support. The energy markets have continued to rally.

Coffee had shown signs that a new bull market may have been starting, but that has stalled. The market has tested support multiple times this week, which so far has held firm.

Currencies

The dollar has seen weakness this week across the board. The long-term trend continues to favour the dollar overall but is weakest and in a downtrend against the Canadian dollar.

The British Pound fell to its lowest level since December during mid-week but has put in a decent bounce since. The trend, for now, remains down.

Interest rate futures

From last week: “Interest rate futures made new highs on Friday but made a key reversal day. Price action on the 10 Year T-Note engulfed the real bodies of the last 11 days, which suggests that further weakness lies ahead and that support will be broken on both the 5 & 10 Year Notes this week.”

Interest rate futures saw the expected weakness this week, and we exited both the 5 & 10 Year T-note long positions for decent profits. Weakness has been seen across the board in the sector, with only the UK Long Gilt in a current long position. Gilts will likely at least test support this week.

Weekly Update – 7 July 2019 – LS Trader

Stocks

From last week: “The S&P 500 is leading the way to the upside but failed to clear the prior week’s high and is grappling with a clear resistance zone. A decisive breakout above this resistance would be bullish.”

This week saw the decisive breakout and a new all-time high weekly close on the S&P 500. The Nasdaq 100 also made a slight new all-time high intraday but closed lower back below prior resistance.

The Dax gapped higher at the start of the week and rallied to its highest level since August last year. Only the Nikkei is currently in a long-term downtrend. All the other stock indices are in a bull market.

Commodities

Gold has seen some wild daily price swings this week but continues to hold above support, and the trend remains up. The trend is also up for Palladium, which made an all-time high weekly close.

Currencies

The Dollar had a strong week, which held off the potential change of trend to down and remains in a long-term uptrend. The British Pound fell to its lowest level since the 1st week of the year. UK Gilt prices are indicating rate cuts on the horizon, which is putting pressure on the Pound.

Interest rate futures

From last week: “However, there has been a bearish divergence between price and RSI, as mentioned last week, as well as volatility contraction, and declining volume. The trend remains up, but weakness towards a test of support looks likely.”

Interest rate futures made new highs on Friday but made a key reversal day. Price action on the 10 Year T-Note engulfed the real bodies of the last 11 days, which suggests that further weakness lies ahead and that support will be broken on both the 5 & 10 Year Notes this week.

Weekly Update – 30 June 2019 – LS Trader

Stocks

Stocks ended the week lower, but the long-term uptrend remains intact for all the stock indices we trade at LS Trader, except for the Nikkei.

The S&P 500 is leading the way to the upside but failed to clear the prior week’s high and is grappling with a clear resistance zone. A decisive breakout above this resistance would be bullish.

The Dax and Nasdaq 100 are both within range of upside breakouts to resume their respective uptrends. The Nikkei remains rangebound.

Commodities

From last week on Gold: “However, the rise has been parabolic this past week, and bullish sentiment is extremely high. It could be that we will see some weakness this week, back towards the 1360 level, before the rally continues.” Gold continued the parabolic rally early this week, before peaking at 1442.9 and reversing sharply back to 1400. Sentiment is a little lower but still elevated. The long-term trend remains up, with the market above support, but further correction could be seen before we see 1442.9 exceeded.

Currencies

From last week: “The Dollar Index broke medium-term support and a trendline that has been in place since September 2018. This may lead to further dollar weakness. “ The Dollar Index ended the week lower but has spent most of the week consolidating the prior week’s declines. We may see some strength for another test of the underside of the trend line before prices move lower. For now, the long-term uptrend remains intact, but critical support could be tested this week.

Interest rate futures

Interest rate futures are consolidating near their recent highs. However, there has been a bearish divergence between price and RSI, as mentioned last week, as well as volatility contraction, and declining volume. The trend remains up, but weakness towards a test of support looks likely.

Weekly Update – 23 June 2019 – LS Trader

From last week: “The current global macro picture is aligned with current market trends, which suggests stocks, Gold and interest rates will continue to move higher. However, the Dollar could breakout to the upside this week, which conflicts with that view.” The macro picture discussed last week continues to play out, and the one part that was not in line, namely the Dollar, appears to have started to fall into line this week.

Stocks

The S&P 500 printed a new all-time high on Friday, but reversed lower, closing below the prior resistance level. Whether we see some additional corrective weakness this week remains to be seen, but the trend is up, and new highs are not characteristics that we see in downtrends.

The Nasdaq 100 lags the S&P 500 but also remains in a long-term uptrend. The Dax is close to a breakout this week above the May high. The Nikkei continues to lag and remains in a long-term downtrend, the only one of the four indices that we trade at LS Trader which is in a downtrend.

Commodities

Gold exploded higher, and the longer-term targets that we mentioned in last week’s update remain the focus. However, the rise has been parabolic this past week, and bullish sentiment is extremely high. It could be that we will see some weakness this week, back towards the 1360 level, before the rally continues.

Currencies

The Dollar began the week with strength but reversed sharply in the middle of the week. The Dollar Index broke medium-term support and a trendline that has been in place since September 2018. This may lead to further dollar weakness. The Dollar is already in a long-term downtrend against the Swiss franc and Japanese Yen.

Interest rate futures

Interest rate futures made new highs for the current move this week, and the long-term trend remains up. However, there is divergence between price and RSI, and there has been some short-term bearish price action.

Weekly Update – 16 June 2019 – LS Trader

The current global macro picture is aligned with current market trends, which suggests stocks, Gold and interest rates will continue to move higher. However, the dollar could breakout to the upside this week, which conflicts with that view. As ever, the markets will go where they are going to go, so we follow along for the ride.

Stocks

Stocks closed the week higher than the prior Friday’s close, but flat to slightly down from Monday’s open, which had gapped higher. The trend remains up for all four stock indices that we trade at LS Trader except for the Nikkei, which remains in a downtrend, trading just below short-term resistance.

Commodities

From last week: “Gold put in a strong rally this week and broke through resistance, and now looks set to test the February high. Gold has been in a sideways range for six years and continues to build what could be a massive head and shoulders bottom. If the market can get above the 1400 level, we could see a rally back towards the all-time high at 1923.7 printed back in 2011.”

Gold rallied further this week, in spite of dollar strength. However, Friday’s candle was ugly, as the market tested and rejected the February high. This may indicate some short-term weakness this week, but the trend remains up, and the market is well above support.

Currencies

The dollar reversed this week, with the Dollar Index finding support from above the prior week’s low. Wednesday and Friday had strong buying days, accompanied by heavy volume, which suggests further strength this week. Several major currencies are set to test critical levels this week, and if dollar strength continues, we could see multiple breakouts and a resumption of dollar strength.

Interest rate futures

Interest rate futures have had a mixed week. The long-term trend remains up across the sector, but there has been some short-term weakness in some markets. The shorter-term futures remain the strongest, and these either tested or made new highs for the current move this week.

Weekly Update – 9 June 2019 – LS Trader

Stocks

Stocks put in a strong rally this week. The long-term trend remains up for US and European indices. Of the four indices that we trade at LS Trader, only the Nikkei is in a long-term downtrend.

However, in spite of the long-term trend being up for US stocks, the RSI remains in the bear range. This week’s strong 5-day rally has not been sufficient to take the RSI back up to 60. This week’s rally has retraced between 50 and 61.8% of the decline from the April peak on the Nasdaq 100 but has exceeded the 61.8% retracement on the S&P 500, which remains the stronger of the two. If either market retraces more than 78.6% of the prior decline, we will likely see the April peak exceeded and the uptrend resume.

Commodities

From last week: “Gold is potentially decoupling from the dollar as both are rallying together. Similarly, the rally in Gold is in the opposite direction to Copper, which could complete a change of long-term trend to down this week. Silver remains in a long-term downtrend but may test resistance this week.”

Gold put in a strong rally this week and broke through resistance, and now looks set to test the February high. Gold has been in a sideways range for six years and continues to build what could be a massive head and shoulders bottom. If the market can get above the 1400 level, we could see a rally back towards the all-time high at 1923.7 printed back in 2011.

Currencies

The dollar has seen further short-term weakness this week. The long-term trend continues to favour the dollar against all of the majors except the Japanese Yen. With the Dollar Index declining this week, a new low RSI print at 35 broke bull market support, with the lowest RSI reading since February 2018.

Interest rate futures

Interest rate futures continue to rally. The 5&10 year T-Notes and the UK Long Gilts all made new highs for the current move. The long-term trend remains up across the sector.

Weekly Update – 2 June 2019 – LS Trader

Stocks

From last week: “The Nikkei found support just above a critical shelf of support which could be tested this week. If support here is broken, there is substantial room for further weakness, possibly back to the December low.” The Nikkei broke support as expected with a big down day on Friday.

Weakness is evident throughout the global stock markets. The S&P 500 broke the next level of support, and the 40 level on the RSI, but remains in a long-term uptrend. It’s the same story for the Nasdaq 100 and the Dax.

Commodities

The metals markets are becoming interesting. Gold is potentially decoupling from the dollar as both are rallying together. Similarly, the rally in Gold is in the opposite direction to Copper, which could complete a change of long-term trend to down this week. Silver remains in a long-term downtrend but may test resistance this week.

Currencies

The currencies have seen mixed trading this week with the dollar index rallying to test the local top before reversing, printing an evening star reversal pattern on the daily chart. This could lead to a test of support in the week ahead. However, the long-term trend continues to favour the dollar against most of the majors.

The dollar declined sharply against the Japanese Yen on Friday as the long-term downtrend resumed on heavy volume.

Interest rate futures

From last week: “As we have been writing for months, the trend globally is towards lower interest rates, not higher. US interest rate futures posted their highest levels in 18 months this past week. UK Long Gilts made their highest print since October 2016 as events of the past week drastically increase the changes of Brexit happening.”

Our comments in last week’s update, which follow on from what we have been writing for months, were right on target as interest rate futures continue to rally, as yields fall. The fed funds rate is now pricing in two rate cuts this year, which is the opposite to what the Fed has been saying for quite a while. Look for interest rate cuts in the US before the end of the year.

Weekly Update – 26 May 2019 – LS Trader

Monday is a Bank Holiday in the UK and is Memorial Day in the US. Therefore, most markets will be closed.

Stocks

The stock markets ended the week lower, but all remain in long-term uptrends except for the Nikkei, which was unable to complete a change of trend. The Nikkei found support just above a critical shelf of support which could be tested this week. If support here is broken, there is substantial room for further weakness, possibly back to the December low.

Commodities

From last week: “However, the long-term trend remains down, with Soybeans and Soybean Oil still in current downtrends and below resistance.” Soybean Oil and Soybeans remain weak and below resistance. However, Rough Rice completed a change of trend to up, and Oats also broke out to the upside. Corn may follow this week.

The energy markets got crushed this week, but remain in long-term uptrend expect for Natural Gas. Metals also remain weak, with Silver already in a downtrend and Gold could follow with weakness this week.

Currencies

The currency markets have seen mixed trading as the Dollar Index rallied to a new high for the current move, its highest print since May 2017. The index was unable to hold those levels and dropped back into the range, and may test support this week. The trend continues to favour the dollar against most of the majors, and if strength returns this week, further breakouts are within range.

Interest rate futures

From last week: “The 3 Month Eurodollar, basis the March 2020 contract, rallied to a new high for the current move. The remaining markets in the sector may test their March highs this week. The trend for interest rates, which move inversely to prices, remains down.” Interest rate futures rallied as expected, with all markets in the sector that we trade at LS Trader breaking out to new highs for the current move.

As we have been writing for months, the trend globally is towards lower interest rates, not higher. US interest rate futures posted their highest levels in 18 months this past week. UK Long Gilts made their highest print since October 2016 as events of the past week drastically increase the changes of Brexit happening.

Weekly Update – 19 May 2019 – LS Trader

Stocks

Stocks had a mixed week after a weak opening on Monday before a recovery during the middle of the week, which still resulted in a down week. The RSI on the daily S&P 500 dropped below the 40 level but only for a day. However, that breach of 40 was enough to have the RSI in a bear range. The long-term trend remains up.

Commodities

From last week: “Silver is the most likely to complete a change of trend to down shortly.” Silver broke support as expected, and completed a change of long-term trend to down, making its lowest print since December. The RSI remains in the bear range, as it has since March.

The grains markets may have bottomed this week as aggressive buying was seen shortly after the open. However, the long-term trend remains down, with Soybeans and Soybean Oil still in current downtrends and below resistance.

Currencies

It’s been a bullish week for the Dollar, which has advanced against most of the majors. The Dollar Index may test the late April high this coming week. The RSI crossed back above the 60 level this week.

The British Pound had a large head and shoulders bottom forming on the daily chart, but that pattern did not complete. Instead, the right shoulder has formed a head and shoulders top, and the neckline was violated. This indicates further weakness towards the January low and a possible change of long-term trend to down in the coming weeks.

The EUR/USD effect, which we have written about many times, stating that January tends to set the high or low for the year, continues to suggest that the Euro peaked at 1.1718 basis the back-adjusted continuous contract, back on January the 10th, and that the Euro will trade below that level (Dollar bullish) for the remainder of 2019.

Interest rate futures

From last week: “Interest rate futures continue to show signs of strength as the long-term uptrend appears to be getting back underway. The March high could be tested in the coming weeks.” Interest rate futures continued to rally this week. The 3 Month Eurodollar, basis the March 2020 contract, rallied to a new high for the current move. The remaining markets in the sector may test their March highs this week. The trend for interest rates, which move inversely to prices, remains down.