LS Trader Weekly Update – Monday 30th April 2012

The past week has seen stocks continue their short-term recovery and move back above their respective 50-day moving averages. The long-term trend is still very much up for stocks and a continuation towards the highs of the year is now a possibility once again.

The dollar weakened across the board and the dollar index in particular may be heading for a test of key support, a break of which would change the long-term trend for the dollar back to down. Commodities have been mostly bullish, helped by dollar weakness.

Stocks

Stock indexes pushed higher, led by the Nasdaq 100, which benefitted from superb results from Apple. Apple makes up around 20% of the Nasdaq 100, which is one of the reasons that Nasdaq has been leading the stock indexes of late, with Apple seemingly moving ever higher. Apple ended the week higher by 5.24 % having giving back some of the gains following the report on Tuesday that resulted in a large gap higher. Gaps often get filled, but the low of the gap is also a key support area, so should Apple drift back down and close that gap, support can be expected, which would in turn likely support the Nasdaq 100.

The German Dax moved higher for a second week and is currently testing the 6800 resistance level that we wrote about last week. A move above 6800 may open the door for a test of 7000.

Last week we wrote: “a glance at the longer term weekly charts still shows how bullish the markets are and what we have seen so far is a relatively small correction and nothing as yet to become to alarmed about. The S&P 500 still has good support at a couple of support zones around 1350 and 1330. As long as those hold the longer trend will still be very much intact.” The S&P 500 did fall almost to 1350 where support did come in and in a big way, taking the index back o ver 1400 briefly. For those that are familiar with advanced candlestick patterns, the last 3 days of the week have formed a pattern known as the advanced block, which indicates selling coming in at the highs of the past 2 days, and thereby providing resistance. If this resistance can be cleared then a test of the highs of the year may follow.

On a seasonal basis we are coming to the end of April and the end of the best 6 months of the year, and also heading into May, synonymous with the “Sell in May and go away”. However, as we always say, the charts and the price is more important than any seasonal indicator.

Commodities

Gold ended the week higher by 1.34% but continues to look undecided on direction. The short term is pushing gradually higher and may well test short-term resistance around $1680 this week. The long-term trend is however still down and the market still remains below the 200 day moving average.

Once again the big moves came in Soybean Meal and Soybeans, which advanced 4.51% and 3.04% for the week respectively. These have both been excellent trades and are currently the most profitable trades of the year for the LS Trader system. This week’s rollover of Soybean Meal banked a huge 8790 spread betting points profit as it continues to post new all time highs.

Currencies

The dollar index has continued to head lower since failing to clear resistance in the previous week and may now be heading for a test of what is possibly quite a significant support level, a break of which would change the long term trend to down. The British Pound continued to push higher and looks to be heading for our next target around $1.6350. The long-term trend is now up for the Pound. Several other currencies are now pushing towards a change of long-term trend to up against the dolla r and a new spell of dollar weakness could be on the horizon. Much though will depend on stocks and whether they can continue up to and through the recent highs.

Interest rate futures

The long-term trend remains up for interest rate futures, and this week saw the 10 year T note reach a new all time high as yields returned to record lows again. There are some indecision patterns present on the daily charts, which suggest that once again the momentum may be waning, but there is no question that both the long-term and short-term trends are still up.

Good Trading

Phil Seaton

LS Trader Weekly Update – Monday 23rd April 2012

The past week has seen stocks move slightly higher with the exception of the Nasdaq 100, which is still the only index to remain above the 50 day moving average.

The dollar reversed upon reaching key support and resistance areas and has therefore moved back to within the recent range against most of the majors with only a couple of exceptions. The trend is still therefore mixed for the forex markets as it is also for commodities. The long term trend is still very much up for stock indexes in spite of the recent short term correction.

Stocks

Stocks pushed higher with the exception of the Nasdaq 100, which is still the strongest of the indexes. The Nasdaq was the only one of the indexes that we trade that was still above the 50 day moving average, but that was tested this week and Friday’s low was pretty much dead on the l ine. If the 50 does give way this week there will be a test of support at 2650. Failure there would open the way to potentially a decline to the next support area around 2570.

The strongest of the indexes that we trade at LS Trader was the German Dax, which advanced by 2.5% for the week, forming a nice bullish engulfing pattern on the weekly chart. We may now see the Dax test short term resistance around 6800. The long term trend remains up.

As we wrote last week, a glance at the longer term weekly charts still shows how bullish the markets are and what we have seen so far is a relatively small correction and nothing as yet to become to alarmed about. The S&P 500 still has good support at a couple of support zones around 1350 and 1330. As long as those hold the longer trend will still be very much intact. Whether we run into the usual seasonal weakness as we get into May remains to be seen.

Commodities

Gold ended the week lower by 1.05% but appears undecided on near term direction as evidenced by the series of small real bodies on the daily charts. The market now site roughly mid way between support at 1613 and resistance at 1680. The market still remains below the 200 day moving average and the trend remains down.

Crude moved higher by 0.54% for the week and everything we wrote last week still holds true. To re-cap, we wrote: “There is still evidence of strong buying from just above the $101 level. It is likely that the $100-101 area will continue to provide good support and possibly lead to a move higher to next resistance around $106.”

The biggest daily move of the week once again came from the grains sector, where Soybean meal advanced 3.6% on Friday alone, advancing to its highest all time level and over the $400 per ton level for the first time since August last year.

Currencies

The dollar index failed to break through resistance and moved back to within the recent range. If anything the index looks more likely to test the lower end of the range next. This is largely influenced by the strong support seen for the Euro at exactly $1.30. We have been writing for the past few weeks about the importance of support at $1.30 for the Euro and that was last week’s low to the pip, at which point buyers returned once again. That makes the $1.30 level very critical, not just for the Euro, but for the dollar on the whole.The British Pound did however manage to break out of its range, giving a long term change of trend to up against the dollar.

Interest rate futures

Interest rate futures ended slightly higher but are showing signs that the momentum is waning. A series of small real bodies on the daily charts indicates some indecision and as they are appearing at resistance may indicate that these markets may push a bit lower in the short term. The long term trend is still up.

Good Trading

Phil Seaton

LS Trader Weekly Update – Monday 16th April 2012

The past week has seen stocks continue to head south, and all but the Nasdaq 100 are now below the 50 day moving average, so the short term trend is down. The long-term trend is still up however for all the stock indexes but further short term weakness may follow this week.

The dollar has remained mixed but may be setting up for a breakout to the upside. To an extent what happens in stocks will impact the dollar as the long term inverse relationship is still intact. The trends for commodities still remain mixed.

Stocks

Stocks declined for another week and as mentioned above, all but the Nasdaq 100 have moved below the 50 day MA. This is an area where we can normally expect some sort of support and the past 4 days action on the S&P 500 has been chopping above and below the average. The 1380 area, which had previously been providing short term support has now switched to resistance due to change of polarity and having recovered the week’s earlier losses the S&P 500 failed at that level and pushed lower. It is quite likely that we will see a test of last week’s lows again this week. However, the long-term trend is still very much up and if viewed from a longer term perspective, the correction seen is very small. A glance at the weekly chart of the Nasdaq 100 puts this very nicely into perspective, as the market had gone almost straight up from the middle of December.

As we have written many times before markets don’t go straight up or straight down and there are always corrections along the way. The question is, how long and how deep will the correction last? That remains to be seen and we’ll have to let the market tell us. On the S&P 500 a good support point is around 1330-1340 and that is an area that has a good chance of being tested. For now, this correction is counter t o the long-term trend so the best place to be is on the sidelines until we get some confirmation one way or the other. April is still seasonally a good month but that does run into seasonal weakness in May.

Commodities

Gold ended the week higher by 1.85% but had been higher until a reversal on Friday. The market still remains below the 200 day moving average and the key $1700 level.

Crude ended the week lower by 0.49% but there is still evidence of strong buying from just above the $101 level. In the past week alone there has been a hammer and a bullish engulfing pattern from the support area so there is clearly strong interest at those levels. It is likely then that the $100-101 area will continue to provide good support and possibly lead to a move higher to next resistance around $106. However, should the support give way it would likely lead to a move lower to around $97, approximatel y where the 200 day MA currently is and the next level of support.

Currencies

The dollar index moved back above the 50 day MA with a very bullish candle pattern on Friday and will likely test short-term resistance this week. A break of this resistance will likely lead to a resumption of the long-term uptrend and a move to at least 8116 and possibly the highs of the year further out. The opposite of the dollar index is the Euro, which once again looks to be declining to test key support around $1.30. A break of $1.30 would likely see a test of the February lows and failure there may open the way for a move further down towards $1.2640. The trend remains down.

Interest rate futures

Interest rate futures have continued to press higher this past week and are continuing their recovery since printing morning star revers al patterns around a month ago. This narrowly kept the long-term trend to up and since then the short term trend is also up. Whether we see a continuation higher to the highs of this year set back in February remains to be seen but that is looking like a good possibility at present.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 9th April 2012

The past week has seen stocks finally correct somewhat, something that has been on the cards for the past few weeks. However, the long term trend is still very much up across the stock indexes and each of the indexes we trade remain above their 50 day moving averages and still a long way above their 200 day MAs.

The dollar saw an end to its recent short term weakness as it ended the week higher against all the majors with the exception of the Japanese Yen. The long-term trends are still up for stocks but mixed for the dollar and commodities.

Stocks

The S&P 500 failed to make new highs this past week and has subsequently fallen back below the 1400 level. This suggests that in the short term a top has been put in at 1419.6 on the June futures contract, although Friday did see buyers return at the lows of the day at 137 3, taking the index back to close at 1390.2.

As has been the case for much of the recent rally, the Nasdaq 100 is still the strongest and is still holding up better than the other indexes and still remains above support. As long as that remains the case there has not been a huge change in sentiment and the other indexes could recover, but if the Nasdaq joins the breakdown then that may accelerate the down moves.

As we wrote last week, on a seasonal basis April is a good month but as ever price and trend is far more important than any seasonal indicator or tendency. Looking further ahead, the old adage often applied to stocks of “Sell in May and go away” is only a few weeks away and given the extent of the recent up moves for stocks, a reasonable correction is not out of the question.

Commodities

Last week we wrote “Gold ended the week higher by 0.42% but having had a brief look ab ove the 200 day moving average on Tuesday, where it ran into the $1700 level, ended back below the 200 day MA. The long-term trend is still down and conditions bearish as long as $1700 resistance holds.” $1700 did hold and the market remains in a long term downtrend and below the 200 day MA having fallen to new lows since the First week in January.

Crude ended the week higher by 0.28% and formed a doji on the weekly chart, which represents total indecision. In the longer term the trend is still up but the short term is without direction. Support from the psychological $100 level is still in place but if that level is taken out there is little in the way of support until the 200 day moving average, which currently sits around the $97 level.

Coffee did break though the $1.90 level that we wrote about last week but was unable to push higher and the trend is still down.

Currencies

The dollar index held on to the previous week’s lows on a closing basis (although the lows were briefly taken out intra-day on Tuesday) and this formed a platform for a decent push higher as the market remains above the February low and also above the 200 day MA. The long term trend is still up but the market is currently in the middle of the range that spans from the lows at 7842 and the local top at 8116 (June contract).

The British Pound fell just short of giving a confirmed change of trend to up and reversed this week to remain in the box range that has been in place for quite some time. The long term trend therefore remains down and the market is currently sitting almost exactly on the 200 day MA, which may provide some support.

The Euro was unable to clear $1.34 resistance and this failure led to a move down back towards $1.30, a level that will likely be tested this week. A break of $1.30 would likely see a test of the February lows and failure there may op en the way for a move further down towards $1.2640. The trend remains down.

Interest rate futures

The morning star reversal patterns that formed in the interest rate futures sector 3 weeks ago have proven to be a strong reversal, as they often are, and the 5 & 10 year T notes as well as the 30 year Bonds have continued to advance higher and the long term uptrend which narrowly stayed in place looks to be getting back on track. We may yet see a continuation higher towards the highs of the year.

However, as we wrote last week, should the market eventually break the low of the morning star pattern, which is now a key support area, there could be some large moves lower as such a move would not only break that pattern but also change the long term trend to down.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 2nd April 2012

The past week has seen stocks push on to new highs but then pull back slightly into the weekend. Nevertheless, stocks still ended up having their best first quarter in 14 years, with large gains being seen in the S&P 500, Nasdaq 100 and the Nikkei 225.

Elsewhere we have seen continued short-term weakness for the US dollar, which has continued to decline against most of the majors, but commodities have remained mixed. The long-term trends are still up for stocks but mixed for the dollar and commodities.

Stocks

The S&P 500 did manage another week of gains but did pull back in the latter part of the week having earlier hit new highs. The trend is still very much up and the index has just about managed to close north of the 1400 level. We wrote last week that a close back above 1400 would be bullish and that is what we have seen last week but the market has so far been unable to push on from there.

Typically, the start of new quarters and new months end up being bullish for the first couple of trading days so we may see another go at last week’s highs in the next few days. Additionally, there are some fairly long lower shadows on some of the daily candles and this indicates that the lows are being rejected and that buyers are still stepping in at the lows. On a seasonal basis April is a good month but as ever price and trend is far more important than any seasonal indicator or tendency.

Commodities

Gold ended the week higher by 0.42% but having had a brief look above the 200 day moving average on Tuesday, where it ran into the $1700 level, ended back below the 200 day MA. The long-term trend is still down and conditions bearish as long as $1700 resistance holds.

Crude has fallen to its lowest level in six weeks and has taken out the $104 level on a closing basis that has been acting as support recently. The long term trend is still up but aside for support from the psychological $100 level, there is little in the way of support until the 200 day moving average, which currently sits around the $97 level.

Coffee put in its first up week in eleven weeks but the trend is still clearly down, although a test of the $1.90 resistance area looks likely again in the near future.

Currencies

The dollar index ended the week lower for a third straight week and may continue further down. 7950 was taken out, as was the 7932 level that we wrote about last week so we may now see a test of the February low at 7842 (June contract).

The British Pound has continued with short-term strength and is now looking to break out of the box range that it has been in for the past couple of months to the upside and is now on the verge of a change of long-term trend to up.

Interest rate futures

Interest rate futures rose for the second straight week, continuing higher from the morning star reversal patterns that formed a couple of weeks ago, which continue to provide support. The long-term trend is still up across the sector, and with the expectation increasing that “Helicopter Ben” will start the printing press running again with more QE3 in the not too distant future, yields may continue their recent decline, sending prices higher once more.

However, should the market eventually break the low of the morning star pattern, which is now a key support area, there could be some large moves lower.

Kind Regards

Robert Stewart