Weekly update 24th February – LS Trader

Following seven consecutive weekly advances, the S&P 500 finally had a down week, albeit a fairly small decline by Friday’s close. The dollar on the other hand has advanced against most of the majors and a new uptrend may be beginning. Dollar strength has pressured commodities and may continue to pressure stocks should the new uptrend get underway.

Stocks

As stated above, the S&P 500 ended the week lower for the first down week in 8. The market dipped below 1500 during the week but recovered on Friday. The weekly chart indicates indecision in this market and the current range remains tight. As we wrote last week, the market has been rising in agony over the past couple of weeks and does not look convincing and is very much susceptible to a correction, especially on a close below 1500.

The Dow, which as mentioned last week is not a market that we trade at LS Trader, found support at 13800 on the March contract and looks poised for a test of 14000 this week. As the Dow is holding up better than the S&P 500, the market’s reaction at 14000 may give a clue as to short term direction in other indices.

The Nikkei remains the strongest of the indices that we trade at LS Trader, and this week closed at its highest level for the current move at 11505. Last week we wrote about the range that has been in place over the past few weeks between 11000 and 11500, and give or take a few ticks, the market is still within that range. A move and close above last week’s high at 11570 would likely indicate a move higher.

The Nasdaq 100 continues to be the only stock index in a downtrend according to LS Trader’s proprietary trend algorithm, had 2 very bearish days mid-week, dipping below 2700 before recovering on Friday.

Commodities

Gold continued lower towards our target at 1550 and dragged silver lower to a confirmed change of trend to down as expected. The entire metals sector has been under pressure with a change of trend to down well within range for copper.

The energy sector has also been pressured lower with US light crude ending the week lower by 3.40%. Brent crude had a smaller decline but the move has been sufficient to bring the current uptrend to an end for now. Brent crude formed an evening star pattern on the weekly charts, which suggests weakness may continue and confirms resistance at the high of the past 3 weeks. No leaded gas and heating oil were also lower.

The grains markets have mostly continued with weakness. Wheat ended lower by 3.97% and looks set to trade below $7 a bushel for the first time since June last year

Currencies

The dollar has had a strong week, advancing well against the majors. This has put the dollar index right on the cusp of a breakout that would give a change of trend to up. Such a move, if confirmed would likely pressure commodities further and would also add to the bearish argument for stocks since commodities and stocks are historically inversely correlated with the dollar.

The British pound joins the Japanese yen as the whipping boys of the currency markets. This week’s sharp decline for the pound easily exceeded our target at $1.5350 (which many doubted when we first wrote about it several weeks ago) and may yet continue lower. If last week’s low can be taken out there is considerable room to the downside for an extended move lower during 2013.

Interest rate futures

Interest rate futures ended the week higher as the sector has continued the recovery following the lows formed 3 weeks ago. On the weekly charts, lower shadows are evident on the past weeks’ candles, indicating buyers coming in and supporting the markets. The trend remains up for the shorter term markets but is still down for the longer term markets.

Good trading

Phil Seaton

Weekly Update 17th February 2013 – LS Trader

Stocks continue to press higher with the S&P posting new 5 year highs once again and all time highs are still within range. Whether we see all time highs remains to be seen as the daily price action suggests that the markets are rising in agony.

The week ahead will be a shortened trading week due to Presidents’ Day on Monday in the U.S.

Stocks

The S&P 500 ended the week higher by 0.31%, with a new high weekly close for the current move as the market continues to stabilize above 1500. However, the daily price action is far from convincing and is very much a slow grind higher that looks susceptible to weakness at any time. The price range for the week was just 13 points, which is very narrow for this market and is a range that is unlikely to continue.

One factor that is possibly holding U.S. stocks down is the resistance that we mentioned in last week’s update for the Dow at 14000. This past week March Dow rose to 14004 but was unable to hold above 14000, closing the week back at 13948. The Dow 30 is not a market that we trade at LS Trader but it is a market that we monitor, especially around psychological levels, such as round numbers.

Last wee we wrote that we expected that the Nikkei would recover the losses seen during the prior week and that did happen, although once again resistance was found around 11500. The current range spans roughly 500 points between just above 11500 and just above 11000. Watch both levels for a breakout, with a subsequent move in the direction of the breakout likely.

Commodities

The general trend with few exceptions is bearish for commodities. Regular readers will know that our expectation at LS Trader is for a bear market in the grains sector to more than erase the 2012 bull market. This past week has seen price action commensurate with that view as the grains markets have resumed the downward trend. Based on LS Trader’s proprietary trend analysis, the only market from the grains sector in a long term uptrend is rough rice.

Gold this week broke out of its trading range to the downside, giving a confirmed change of trend. This move led to some heavy selling on Friday and we may now see further weakness that will likely drag silver lower for a change of trend as well.

Sugar is also trending nicely lower and is in the classic bear market formation of lower lows and lower highs. Our next downside target is the May 2011 lows at 17.01.

Coffee continues its bear market move, this week falling for a fourth consecutive week. This week’s decline of 2.77% continues a fairly impulsive decline since the failure of the May contract to clear 160. We have downside targets at 135.

Commodity bulls are really only getting any joy at present from the energy sector, particularly brent crude and no leaded gas. Heating oil is also in an uptrend but both U.S crude and natural gas are still in long term downtrends.

Currencies

The dollar index advanced for a second straight week as the dollar gained almost across the board. The long term trends in the currency sector are mixed. This past week saw the end of the euro uptrend, at least for the near term, although the longer term trend is still intact.

The British pound continues to crumble, this week dropping below $1.55 for the first time since July last year. We remain on target for a continuation lower towards $1.5350.

The Japanese yen continues to weaken and this week lost another 0.67% against the dollar, in spite of a bit of a recovery seen in the middle of the week. The long term trend continues to favour the dollar but there are signs that the current trend may be on the verge of taking a bit of a breather. Longer term this market still looks to have further to run. This has so far been a hugely profitable trend for the LS Trader system with already with 1302 spread betting points profit from this single trade alone, and the trade is still running.

Interest rate futures

Interest rate futures were lower across the board but the new long term downtrend is still yet to really get underway and still ideally needs confirmation with some weakness from the shorter term markets. The lows of the current move continue to attract buyers and selling is unlikely to take hold until those levels are taken out.

Good trading

Phil Seaton

LS Trader

LS Trader system update 10th February 2013

After a bit of a dip earlier in the week, the S&P 500 rose again to new 5 year highs and is now just a few percentage points off all time highs posted in 2007. U.S. markets overall remain strong, particularly the S&P 500. The Dow 30, which is not a market that we trade at LS Trader, but is still nonetheless a major index, is grappling with resistance at 14000. With all time highs just over a couple of hundred points away, strong resistance at present levels can be expected.

The long term trends are up for stocks, mixed for commodities and bonds, and mostly down for the dollar.

Stocks

Big selling hit the Dax on Monday, bringing the uptrend to an end, at least for the time being. The longer term trend however is still very much up and we may yet see new highs for the year, especially if U.S. and Asian stocks continue to advance.

The S&P 500 ended the week higher by 0.38%, with a new high weekly close for the current move as the market tries to stabilize above 1500. The weekly charts show a hanging man pattern, which is typically bearish, but also shows that any declines below 1500 are being short lived and met with new buying.

Of the 4 stock indices that we trade at LS Trader, only the Nasdaq 100 is in a long term downtrend. This is certainly a cautionary note for stock bulls as generally the most bullish advances for stocks are led by the Nasdaq, which currently is the laggard and is still almost 100 points of its recent multi-year high, whereas the S&P 500 is continually making new multi year highs. This is certainly some bearish divergence.

The Nikkei also hit new multi year highs during the past week but fell back on Thursday and Friday. These losses may well be recovered early next week.

Currently it seems that investors want out of bonds and into equities so all time highs for the S&P 500 in 2013 are a distinct possibility.

Commodities

It’s been a fairly indecisive week for the metals markets with gold and silver still remaining range bound. Even the leading two metals markets, copper and palladium lost ground this week. However, the trend is still up across the sector.

Brent Crude continues its recent good run, this week reaching its highest level since March last year, following an advance of 1.83% for the week. Gasoline and heating oil were also higher but US light crude, which along with natural gas is still in a long term downtrend, ended lower by 2.1%.

The grains sector overall has seen renewed weakness and the expected bear market decline that our proprietary trend analysis at LS Trader indicates may well be about to begin the next leg lower. Several of the grains markets are looking under pressure once more with only rough rice remaining in a long term uptrend.

Currencies

The dollar had a good week as indicated by the 1.49% weekly advance for the dollar index. The sharp drop in the Euro, which ended the week lower by 2.19%, influenced this dollar index advance. On the weekly chart, the Euro has printed a large bear sash pattern, which suggests strong resistance at the highs of the pattern at $1.3715.

The dollar reached our long term target at 9400 before pulling back to end the week almost flat, forming a doji star on the weekly charts. This is typically an indecision pattern and points to a pause in the current uptrend. As we have written several times over the past few weeks, a correction is due, especially following a 13 week advance.

Interest rate futures

Interest rate futures were mostly higher this week having earlier fallen to new lows for the current move before recovering those losses.

As we have written in recent weeks, when everyone is so bearish on a market or a sector, the move usually falls well short of expectation. Already after only a couple of weeks following the break of critical support have buyers come back in to the market, so it remains to be seen how much further the current move has to run to the downside. It may be that we have to wait a little longer before we see an extended move to the downside.

The long term trend is down for the 10 year T notes and 30 year T bond, but is still up for the shorter term markets. An extended move will not happen until the long term trends all align across the sector. This means weakness must enter the shorter term markets as well. So far this has not happened.

Good trading

Phil Seaton

Where can I find live charts for interest rates?

One of the questions we regularly get asked is “Where can I find Live Charts/Candlestick Charts for spread betting, in particular interest rates and bonds?”

Live charts for trading interest rates and bonds are important, as they are for all markets. It is important as any delays in data could result in losses or missed profit opportunities. However, the more successful traders will be adding stop losses to their trades as soon as they open them, and these stops will get triggered automatically should the markets rise or fall to the level of the stop. This negates the need for live data to a very large extent.

In addition, traders can also place orders to open trades, known as entry stops, so that should the market reach a preset level at any time, the spread betting company where you have placed your order will automatically fill your trade. This is a very effective way to trade as it removes the need to sit in front of the screen all day and removes the emotion from trading to a very large extent as orders can be placed at the beginning of the trading day or week, when the markets are closed. This is the way that the LS Trader system works.

Candlestick charts

The most popular type of chart for traders these days is the candlestick chart. It is considered to be the best because it graphically shows the highs and lows of various time intervals and is also more visually representative than the bar chart, even though it uses the same data to create the candle, namely the open, high, low and close.

The trader can tell at a glance as to whether the market is up or down on any timeframe by the colour of the candle for the session. If the close is above the open, the candle will generally be filled in green as that is an up day. If the close is below the open, the candle will generally be red as that is a down day. Other colour combinations can be seen, such as white for up days and black for down days. Another type is hollow candles for up days and filled candles for down days. They all mean the same thing, whichever colour scheme is used.

I mostly use candlecharts in my own trading as they are easier to look at and quickly convey more information about the security than bar charts. That said, there are some patterns that are unique to bar charts, so using both can be beneficial, especially if the trader is using some form of pattern recognition to make his trading decisions.

Live Charts on the internet offered by spread betting companies

Live charts can be found just about anywhere on the Internet. All spread betting companies have charts available for their clients. However, not all spread betting companies give access to live data for all markets, although these days most do.

IG Index is one company that offers live data access for charts, ETX Capital is another. Both of these spread betting companies offers a complete charting package with professional features. The live charts offered give traders the ability to adjust the charts to their own preferences and add their own preferred indicators. A trader can add over 70 indicators or create their own indicators. Traders also have the ability to draw directly onto the chart should they so wish.

Spread betting software and data packages

Live charts and candlestick charts are easy to find on the Internet. However, the best place to start is with your own spread betting provider as the charts will already be there and be free. The more serious trader can look to charting packages and market data from companies such as Thomson Reuters Metastock. They offer one of the best charting and data packages and I use both daily. Traders can choose between real time or end of day data depending on their preferences. End of day is suitable for most and is much cheaper. You can take advantage of a 30 day free trial of Metastock software here

Financial Spread Betting Becoming More Popular – Press Release

Financial spread betting popularity set to surge over the coming years

2013 London – LS Trader announced today that they expect the popularity of financial betting to keep increasing over the coming years as more people become disillusioned with returns from mutual funds and seek to take control of their own investments and financial future by using financial betting.

There are several factors that suggest that the number of people gravitating towards financial spread betting will continue to increase and these include ease of use and instant access to their own trading platform, disillusionment with investment fund returns and the increasing levels of tax payable in the UK” said Phil Seaton of LS Trader. “A major factor is the tax free advantage that is currently in place for financial spread betting in the UK”.

People with higher incomes who have substantial investments will not be to keen to pay the new higher level of income tax at 50%, which came into effect a couple of years back. This rate is set to drop to 45% in April 2013, but it’s still a substantial part of income. One way of getting a better return on investments is not to pay any tax on your profits, which can be done in the UK with financial betting.

LS Trader Spread Betting System

Phil Seaton added “With the speed and availability of information increasing people are becoming more impatient with low returns from investments and want to see faster gains as well as increasing their own control over their money. Financial betting provides a means for people to try and outperform the various investment funds on their own. Many will struggle to do this on their own back but by taking advantage of a trading and information service such as LS Trader, the path becomes clearer and easier.”

It looks like financial betting will become increasingly popular over the coming years and this is evidenced by many more providers of spread betting coming online. This looks like a major growth area, which is set to continue for years to come, especially if UK income tax remains high, which is very likely!  People who take advantage of trading systems and information services such as LS Trader have the opportunity to not only outperform investment fund performance, but to also pay no tax on their profits under current UK tax laws.

About LS Trader

LS Trader is a leading financial spread betting information service, which provides information on 39 futures markets. The system is perhaps best known for the outstanding returns generated in 2008 where the system produced profits of 1504.1%*. The service publishes the trades exactly as and when the system indicates new trades and this includes entry and exit prices as well as portfolio selection and money management rules. In other words, it is a complete service that includes everything required for successful spread betting.

LS Trader weekly update 3rd February 2013

As we expected in last week’s LS Trader update, the March S&P 500 crossed the 1500 level to make new 5 year highs once again, as market conditions remain bullish. According to the January stock market barometer, which simply states that as goes January, so goes the rest of the year, suggests that stocks will continue to rise in 2013 and hit new all time highs. Going back to 1950, this barometer has an 88.7% accuracy ratio and has only been significantly wrong on 7 occasions. Read from that what you will. What we can say for certain is that currently stocks are bullish and that the long term trends for stock indices are up.

The long term trends currently are up for stocks, mixed for commodities and mostly down for the dollar. The bond markets saw a change of trend to down for the first time in a long time during the past week.

Stocks

Stock indices continue to soar as once again three of the four stock indices that we trade at LS Trader have gone on to make new multi-year highs once again. These three markets are the S&P 500, Nikkei 225 and the Dax. The laggard continues to be the Nasdaq 100, the only index of the four that is still in a long term downtrend according to our proprietary trend indicators at LS Trader.

The Nasdaq 100 is still grappling with resistance at 2765 and is still a way off last year’s highs. This means that should the markets turnover, the Nasdaq will be the first short candidate and likely the one with the largest downside potential. However, for now the focus will be on the leading indices, in particular the S&P 500 and the question as to whether we will see all time highs in 2013. It’s looking increasingly likely at this stage.

From a spread betting perspective, the Nikkei 225 is currently the most profitable of the indices and is currently showing us a profit of just over 2000 spread betting points since we entered long back on the 21st November at 9270.

January ended with the S&P 500 having its best year since 1997, while two other indices that we don’t trade at LS Trader, the Dow and the FTSE, reached their highest levels since 1994 and 1989 respectively. The latter two indices o not historically trend well and are not profitable for trend following systems such as ours, which is the reason why they do not form a part of the LS Trader master portfolio.

Commodities

The metals markets continue to be mixed, with gold currently the weakest. Copper and Palladium continue to lead the way, followed by silver. Palladium reached its highest level since September 11 this past week. Currently all 4 metals are in a long term uptrend, although gold is perilously close to critical support and a change of major trend to down.

Last week we wrote that strength had been returning to the energy sector and we’ve seen more of that this week with Brent Crude climbing to its highest level since April last year. Heating oil and no leaded gas have also continued to rise, especially the latter, which advanced 5.66%, reaching its highest level since July 2008.

Currencies

The dollar has been lower almost across the board, with the main exceptions being against the British Pound and the Japanese Yen. The dollar index has resumed the long term downtrend this week and fell to just a few ticks above critical major support at 7887. Should this level be breached, we can expect continued weakness for the dollar.

The Euro climbed to its highest level since November 2011 and is now closed to completing the target set by the bull flag at $1.3750.

The yen continues it’s sharp decline and we now have just over 1200 spread betting points of profit from this pair since we entered the trade back on the 15th November. The yen’s decline has been extremely profitable for the LS Trader system, as its weakness has also helped the Japanese stock index to soar higher, bringing in substantial profits from that long trade as well.

Interest rate futures

Major support was tested during the past week on the interest rate sector, with both the 30 year T bond and the 10 year T note breaking support. Perhaps significantly, the 30 year bond closed the week below support and the trend is now down. How far this market can fall remains to be seen.

The shorter term markets are just about holding on to the long term uptrend but that could change in the coming weeks.

Good trading

Phil Seaton

LS Trader