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
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.
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.
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.