LS Trader Weekly Update – Monday 27th February 2012

The past week has seen stock indexes continue to climb higher, in some cases to new multi-year highs. We have also on balance seen the dollar continue recent weakness and commodities advance.

Long-term trends are up for stocks and are heading that way for commodities. The trend for the dollar is up on balance but may be changing soon.

Stocks

Friday’s high on the S&P 500 was the highest level seen since May 2008 and as we wrote last week this gives us our next target at 1385. We wrote a couple of week’s ago about the importance of the lower support from the bull channel holding and it did again this week, bouncing directly off it on Thursday before pushing to new highs. just about this week, and new highs for the year followed.

The Dax hit another new high since August and ended the week ahead by 0.37%. As was the case with the S&P 500 and with the prior week, the Dax continues to find support from the trendline that has held since December last year. Each decline towards the trendline is being met with buying.

The trend for stock indexes remains up across the board and we may yet see new highs, especially if these markets remain in the bull channels. However, although the Dow and Nasdaq 100 have cleared their 2008 highs, the S&P 500 has not and as we have written many times before, the S&P 500 is the most important of the indexes so the 1385 level will be an important level to watch as failure there will likely put the brakes on the other indexes.

Commodities

Crude oil remains in a highly bullish trend and looks to be heading towards last year’s highs around $114. The current chart shows no sign as yet of a reversal and there is nothing in the chart to suggest that the market won’ t reach that level, aside from the fact that the market is possibly a little overextended in the short term. The weekly advance for Crude was an impressive 5.96%. No leaded gas and heating oil are also on a bullish run and are following crude higher.

Gold advanced 2.93% for the week, forming a bullish candle on the weekly charts but that does not perhaps tell the full story as the last 3 trading days of the week were spinning tops and Friday was a down day. This is why the Japanese Candlestick traders counselled against using candles on weekly charts, and only using daily charts, as much of the message can be lost on a weekly chart. That said, the recent highs around $1765 may now provide some support due to change of polarity where prior resistance becomes support.

Currencies

The dollar index ended the week lower by 1.33% and now looks to be heading lower to the 7800 level and the 200 d ay moving average. For now the long term trend is up overall for the dollar but with much more continued weakness that may change soon.

The British Pound continues to trade within the box range between $1.56 and $1.59. A break of either level may give rise to a decent move but for now the trend is down. For the box range to continue, resistance around $1.59 needs to hold to send the pound lower again. The Pound had a good week against the Yen, giving a confirmed change of trend to up for the first time since July last year.

For the second week running one of the big moves of the week was in USD/JPY, with a 1.93% gain for the dollar. This has taken the dollar back above the 8000 level, which suggests a continuation higher towards 8200.

Interest rate futures

Interest rate futures headed lower and tested medium term support as expected, which held once again, leaving futures slightly ahead for the week. The long-term trend still remains up for the sector.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 20th February 2012

The past week has seen stocks reach and move above our long-standing target of 1355 on the S&P 500 and U.S. stocks have now all but erased their losses since June 2008. The trend remains up for stocks with indexes either at or near multi year highs (the Dow 30 hit a 4 year highs this past week and the Nasdaq 100 reached its highest level since 2001).

Considering the above the dollar has held up quite well and with the exception of against the Australian and New Zealand dollars, still remains in a long term uptrend.

Stocks

For the past several weeks we have been writing about our 1355 target on the March S&P 500 and it was finally reached and cleared this week and we now have new targets at 1385. We wrote last week about the importance of the lower support from the bull channel holding and it did just about this w eek, and new highs for the year followed.

The Dax also moved higher, reaching its highest level since August and continues to find support from the trendline that has held since December last year. Each decline towards the trendline is being met with buying and this week was no exception as Thursday’s lows bounced exactly off this trendline, propelling the market to new highs on Friday. This week also saw a change of long term trend to up for the Nikkei, so the trend is now up across the board for all the indexes we trade at LS Trader.

Commodities

Last week we wrote on Crude “The market remains above the 200 day moving average and the trend is still up so an upside breakout remains more likely” and we did see a breakout to the upside. April Crude reached its highest level since September last year and the trend remains up. Heating oil and No leaded gas followed Crude higher and gasoline is now moving towards last year’s highs and we may see those levels tested this week.

We have a third consecutive doji on the weekly chart on Gold so indecision in this market is very much the current status. Buyers are so far coming in just above $1700 but if that level fails we may see a move lower towards the 200 day moving average and support around $1650. The long-term trend still remains down and resistance is still in place at $1770 on the April contract.

Currencies

The dollar index ended the week higher by 0.29% and does appear to have formed some decent short-term support around 7850 with support provided by the stick sandwich pattern and the bullish engulfing pattern that we wrote about last week. The long-term trend remains up for the dollar overall but is down against the Aussie and New Zealand dollars.

The British Pound did not quite make it as far down as $1.56 and t he 50 day moving average but did make quite a strong recovery on Thursday and Friday. Resistance is still in place at the 200 day moving average around $1.59 and that may be tested this week.

Big move of the week came as the Yen declined against the dollar by 2.41% for the week, a move that saw the dollar push above the 200 day moving average for the first time since April last year. More significant than that though was the break above the highs formed on the 31st October last year. The trend is now up for the USD/JPY.

Interest rate futures

Interest rate futures ended the week lower and the uptrend may be coming to an end, at least for the near term. Longer term markets are holding up slightly better than the shorter-term markets and medium term support is still holding. Those support levels may be tested this week.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 13th February 2012

The past week has seen stocks and the dollar end the week relatively flat although stocks did rise to new highs for the year. The trend for the dollar remains up overall and commodities remain mixed.

Stocks

For the past several weeks we have been writing about our 1355 target on the March S&P 500 and this past week saw the market rise to 1352.3 before pulling back to close the week at 1340.6. This resulted in a small gain for the week of 0.11%. In spite of the small correction towards the end of the trading week, the S&P 500 remains in a bull channel and the trend is still up. The bottom of the bull channel is currently around 1325 and it will be interesting to see if that lower support line of the channel is hit this week and if it once again hits support.

Last week we wrote that resistance at 1355 can be expect ed but if it can be taken out we could see a move to the next target at 1385, and that still applies, especially of support at the bottom of the channel holds.

Commodities

Crude ended the week ahead but remains within the box range that it has been in for the past several weeks. The market remains above the 200 day moving average and the trend is still up so an upside breakout remains more likely although this would change on a break below $95.

Gold ended the week lower by higher by 0.86%. Last week we wrote that in spite of recent strength Gold was showing signs of a possible turn. We also wrote “The weekly bars show a doji, which at resistance can be a prelude to a turn, but the stronger signal comes on the daily charts where there is a large bearish engulfing pattern. This could lead to a move lower.” So far the move lower has been reasonably well contained but the long term trend doe s remain down. On the April contract there is resistance around $1770 but the next level of support is not until $1650.

Grains are not doing a great deal and the trend remains down. Most of the grains markets are showing numerous doji candles, which represent indecision. A break to the downside continues to look more likely.

Currencies

The dollar index did briefly fall through a short term support level but had regained it by the end of the week. Medium term support at 7800 is still holding so the medium term trend is still up for the indexs as is the long term trend. On the daily charts there was a stick sandwich support pattern followed by a bullish engulfing pattern on Friday so there is certainly some buying pressure coming in around 7850.

Last week we wrote that the British Pound looked to be heading for the 200 day moving average, at that point around $1.59, and that is exac tly where the pound reached before reversing and making a move lower. The trend remains down for the Pound and it may now be heading down towards the 50 day moving average around $1.56.

Interest rate futures

Interest rate futures ended the week pretty much flat but all of the markets had been lower earlier in the week. All of the markets did hold at short term support and the trend remains up across the sector.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 6th February 2012

It’s been another week or risk on, which has seen stocks continue in bullish mode and the dollar continue its recent weakness. The trend continues to be up for stocks and is still up overall for the dollar but that may be going to change. Commodities for the most part have continued to benefit from dollar weakness.

Stocks

January ended the month up, which according to the January Barometer means that there is a good chance of stocks ending the year higher. At present things are continuing in a bullish fashion and risk-on remains the primary strategy for traders.

We have been writing about the likely target of 1355 on the S&P 500 March contract and that still looks to be the likely destination. Resistance at 1355 can be expected but if it can be taken out we could see a move to the next target at 1385. We will review from there if and when that target is reached.

The Nasdaq 100 once again continues to lead the way, which as we wrote last week is generally the most bullish set up. The Nasdaq 100 is now approaching 11 year highs. The Dax is also moving higher having recently changed long-term trend to up. Of all the indexes that we trade at LS Trader, the Nikkei is the weakest and still in a long-term downtrend. Whether that changes or not remains to be seen.

Commodities

Crude found support on from the 200 day moving average but still ended the week lower by 1.73%, ending the week once again below the $100 level. If support at $95 fails then a move to $93 will likely follow.

Gold ended the week higher by 0.33% but is showing signs of a possible turn. The weekly bars show a doji, which at resistance can be a prelude to a turn, but the stronger signal comes on the daily charts where there is a lar ge bearish engulfing pattern. This could lead to a move lower. If however, the market can close above the bearish engulfing pattern we may see a move higher towards $1800. For now the trend is still down for Gold. We have similar action on silver, but the reversal pattern on gold looks stronger.

Currencies

The risk-on move has continued, as has dollar weakness. The dollar index though ended the week flat and has so far not fallen to the next support level at 7800. There are a series of lower shadows on the daily candles, which suggest some buying coming in around the lows of last week.

Last week we wrote about the ultimate risk-on currency, the Australian dollar and said that close on its heels was the New Zealand dollar. Both of these currencies continued higher and these are the first 2 markets to give a change of trend to up. The third commodity currency is the Canadian dollar and tha t may be the next to give a change of trend.

The pound has also continued its good run and may be heading for the 200 day moving average, currently around $1.59.

Interest rate futures

Interest rate futures continued to climb higher until Friday, where having made new highs initially, heavy selling followed. The trend is still up across the sector.

Kind Regards

Robert Stewart