Stocks pushed to new highs for the year early in the week but have corrected somewhat since. For now the uptrend remains intact. The dollar ended the week mostly lower and the trend for the dollar is still mixed. Dollar weakness has benefited commodities, many of which have been higher this week. Metals in particular have had a good week.
The long-term trends are up for U.S. stocks but mixed for the dollar and commodities.
The S&P 500 hit new highs since early 2008 but did pull back from those highs later in the week. Friday saw a bit of a recovery, which left the market closing back above the 1400 level. The trend still remains up but how much longer this continues to be the case for remains to be seen.
The Nasdaq 100 performed similarly to the S&P 500 having hit new 11-year highs on Tuesday, only to pull back later in the week. The trend is still up and the market still very bullish. The Nasdaq remains further above support than the S&P 500, suggesting that its uptrend may last a little longer.
The Dax came within a whisker of giving a change of long-term trend to up according to our proprietary trend indicators but failed to complete the trend change. Support came in around 6900 but for now the trend is still down. The trend is also still down for the Nikkei 225, which this week reached its highest level since early May.
The best trending markets are still coming from the grains sector, which has seen several huge moves this summer. Both Soybeans and Soybean Meal reached new all time highs this week and these moves have been highly profitable for the LS Trader system. Other markets in the sector as also strong, especially Corn, with Oats and Wheat also in strong uptrends.
We wrote last week that a break above $1650 for Gold might lead to a test of the 200-day moving average and a possible continuation towards the $1700 level. Gold did indeed clear the 200-day MA and was looking good for a continuation higher towards $1700. Friday’s doji pattern suggests that the market may be pausing here but whether it continues higher remains to be seen. Often we see this type of chart action develop in to an evening star pattern, which is a bearish reversal pattern. For that pattern to complete we would need to see Monday’s candle be a long black candle that closed at least 50% in to Thursday’s tall white candle. Such a move would lead to a test of support at the 200 day MA. Alternatively, should the market close above the high of this forming pattern a move towards $1700 and a change of long-term trend to up will likely follow.
The energy market ended the week mixed but had been higher earlier in the week. The strongest of the sector is still No leaded gas, the only market in the sector where the long-term trend is up.
Coffee declined for a fifth straight week and still remains on course for our 15300 target on the December contract.
The dollar index ended the week lower by 1.21% and briefly took out support at 8139 before bouncing exactly off the 200 day moving average on Thursday. Friday saw a continuation of strength and this pattern, known as a snap and crack suggests that the market was unable to hold below support and may now continue higher. The long-term trend is still up but this may change soon if the aforementioned support fails to hold.
Interest rate futures
The long-term trend in the interest rate futures sector is still up. This week saw a continuation of the market rejecting the lows as evidenced but the long lower shadows on Monday and Tuesday’s daily candles. This formed a platform for quite a strong rally for the week for 30 year US T-bonds, which ended higher by 1.71%. Those that thought that a top was in and went short will have been caught once again by going against a very strong uptrend. As we have written for the past couple of weeks, further weakness is required before we get a confirmation of a change of trend to down.