Weekly Update 25 October 2015 – LS Trader

The stock markets continue to recover and could be set to test the highs of the year in the coming days. The dollar has seen a large reversal and may be heading higher to test key resistance levels against several of the majors. Commodities remain weak and in long-term downtrends with only a few exceptions

Stocks

From last week: “This week has seen further rally in the S&P 500 and the market is now right back at this key level. The RSI has also moved above 60 for the first time since March. Should we see continued strength this week, confirmed by a higher RSI, we may see a move higher to test the double top.” The S&P 500 has continued higher, and the RSI has risen to its highest level since December. The market has now retraced more than 78.6% of the decline from the all-time high to the August 24th low. It’s common to see a market complete a full retracement once the 78.6% level has been exceeded.

The Nasdaq 100 has been stronger still and broke through the underside of the trend line from the October 14 lows. This, coupled with an RSI up to 69.78 suggest that the Nasdaq will complete the recovery and test its high posted back in July.

The Dax and Nikkei have also rallied, but both remain considerably weaker than the U.S. markets and both require considerable further rally to complete a change of trend to up.

Commodities

Both Gold and Silver have pulled back this week, with Gold pulling back from levels that were approaching a change of trend to up. The failure to break through resistance keeps the trend for both precious metals down. The trend also remains down for Copper and Palladium, in spite of recent strength seen.

Natural Gas did fall to new lows and dropped to its lowest level since June 2012. The long-term trend remains down for the entire energy sector, and we could see new lows for the year in the Crude markets over the coming weeks.

Sugar completed a change of long-term trend to up this week for the first time in tow years, such has been the extent of the recent bear market. However, there has as yet been little in the way of follow-through following the breakout. Last week’s high now becomes a key level for this market, which if taken out could see further rally towards the 17.00 level.

Coffee has put in a huge reversal lower in the direction of the long-term trend, and the RSI has broken back below the 40 level, suggesting new lows lie ahead.

Currencies

The dollar had a sharp reversal this week against most of the majors. The Euro at one stage was lower by just shy of 400 pips and may be set to complete a change of long-term trend back to down in the coming week or so. Should the trend change be completed, we can look for a test of the March low, still 500+ pips below current levels.

The Dollar Index, which is a near perfect inversion of the Euro, rallied to its highest level in nine weeks and may also complete a trend change over the next week or so.

Interest rate futures

Interest rate futures all ended lower this week, and the recent uptrend could be coming to an end. For now, four of the five interest rate futures markets that we trade at LS Trader remain in a long-term uptrend. The 30 Year T-Bond remains the weakest and is still in a downtrend.

Good trading

Phil Seaton

LS Trader

Weekly Update 18 October 2015 – LS Trader

The stock markets have continued their recent recovery, but all remain in long-term downtrends at present. The dollar has continued to weaken and looks like it could be set to resume its downtrend against some of the majors in the coming weeks.

Commodities remain mixed, with strength being seen in the metals sector, but weakness persists elsewhere, such as the energy sector.

Stocks

From last week: “If the S&P 500 moves decisively above this 2015-2020 area, further strength may be seen over the coming weeks, possibly back towards the all-time highs posted earlier in the year.” This week has seen further rally in the S&P 500 and the market is now right back at this key level. The RSI has also moved above 60 for the first time since March. Should we see continued strength this week, confirmed by a higher RSI, we may see a move higher to test the double top.

The Nasdaq 100 is in a similar position but has been stronger than the S&P 500, already moving above the key prior support level. The RSI here has also moved above 60, indicating further strength near-term.

The Dax and Nikkei both remain weaker than their U.S. counterparts and as before look the most likely to break to the downside in the event of renewed weakness. The long-term trend remains down for global stock indices.

Commodities

Both Gold and Silver have continued their recent rallies, and both metals continue to move higher towards key change of long-term trend levels. Gold at present is the leader and could complete the upside breakout in the next week or so. The RSI suggests that further strength lies ahead, and the trend could change for the first time since January.

The energy markets have resumed weakness following their corrective rally of the past month or so and could test key support levels in the next few days. Should these support levels be broken, it is likely that we will see a test of the August lows and quite possibly lower levels still. The technical structure of these markets suggests that we have not seen the bottom in any of these markets yet.

Natural Gas, currently the weakest market in the energy sector, looks set to test its recent low, which if broken will see the market make its lowest print since June 2012. The long-term trend remains down across the board in the energy sector.

Sugar was unable to take out the key level recovery high this week but looks likely to do so this week. Should the breakout be successful, a change of long-term trend to up will be completed.

Currencies

The dollar fell to test a short-term support level against the Yen almost to the pip but reversed higher. This market, as we have mentioned previously, has been a key factor in keeping the currency markets in a tight range. Should last week’s low be taken out we will likely see further weakness to test the August 24th low at a minimum. The RSI remains in the bear range, but a decisive move has yet to be seen.

It’s possible that we could see several currencies breakout against the dollar in the coming week or so, with the dollar index, Yen and Euro all close to testing key levels. Should these levels be broken, then we could be in the early stages of the next leg down for the dollar.

Interest rate futures

The 3 Month Eurodollar, basis the September 2016 contract, rose to a new all-time high on Wednesday but gave back some of its gains by Friday’s close. The long-term trend is clearly up, but short-term support is not much lower than current price levels. Friday’s low tested a very short-term trendline that has so far held.

The long-term trend remains up for all markets in this sector with the exception of the long bond, which continues to lag. However, key levels in this market could be reached if we see strength return to the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update 11 October 2015 – LS Trader

The stock markets have continued with counter-trend rallies, but all four indices that we trade at LS Trader remain in long-term downtrends. The currency markets remain mixed, but dollar weakness is evident against several of the majors in the short-term. Interest rate futures remain in an uptrend, and commodities are mixed. There are a few commodity markets that are showing some early signs of strength, Sugar being one, in particular, but overall the commodities markets are still in a bear market.

Stocks

Stocks have continued to press higher this week. Friday saw the S&P 500 reach its highest level since the 21st August and are now just below the prior support level that held the markets up for several months earlier in the year. This makes last week’s high a very key level as prior support should now be resistance and should provide a barrier to further gains. If the S&P 500 moves decisively above this 2015-2020 area, further strength may be seen over the coming weeks, possibly back towards the all-time highs posted earlier in the year.

The Nasdaq 100 has seen similar price, and it may rally further to test the underside of the long-term trendline, which currently intersects the market around the 4565 level.

The two weakest indices are still the Nikkei and Dax. Both ended the week higher but are clearly still in long-term downtrends. These two indices look likely to be the first to turn lower again should weakness return to global stock markets.

Commodities

Gold and silver have shown continued strength this week, and there are further signs that the bottom may be in for now. Silver, which broke its trendline a few weeks back, has this week seen its RSI move above the key 60 level, which suggests further strength over the coming weeks. Gold, which was stronger on Friday than Silver, reached its highest level since August. Here, the RSI has just crept above the 60 level at 60.48, also indicating further strength over the coming weeks. Whether either of these metals rallies sufficiently to complete a change of trend to up remains to be seen.

Sugar has had another strong week, and the bottom looks to be in on this market. The RSI has reached a very bullish 80.76 this week, and price has rallied to its highest level since mid-May. The long-term trend has been down for Sugar since July 2014, but a change of trend to up looks imminent and may complete this week.

Currencies

The past week has seen some dollar weakness, particularly against the commodity-based currencies of Australia, New Zealand and Canada. The long-term trends are still mixed in the currency markets but remain up for the Euro and down for the dollar index. The dollar index is heading down towards the lower end of the recent range and may fall further to test 92.77, the August low. Such a move would lead to further Euro strength.

The British Pound, already in a downtrend against the dollar, has rallied this week but does look like it may be running out of steam. The RSI has turned over below the 60 level, which keeps it in the bear range. This suggests price weakness may be seen next week.

The most important currency market at present is USD/JPY because it has such an impact on global markets. One of the reasons that many markets have been consolidating is due to the Yen moving sideways in a box range against the dollar. This consolidation has been in place now for almost two months. Once we get a breakout from this range, we should see some large moves in several markets.

Interest rate futures

The long bond was unable to exceed the prior week’s high and traded lower throughout most of the week. This weakness has kept the long-term trend down in this market, which is the only once of the five interest rate futures markets that we trade at LS Trader that is still in a downtrend.

The other markets in the sector were all weaker this week, but they remain in uptrends. Tests of key short-term support levels could be seen this week, and the markets will need to turn higher from near current levels to keep the uptrends intact.

Monday is Columbus Day in the U.S., so the bond market is closed.

Good trading

Phil Seaton

LS Trader