The past week has seen a continuation of light summer trade, with low volumes and low volatility continuing. That should start to change over the next week or so as we move into September.
The S&P 500 hit a new all-time high on Tuesday but ended the week lower following a break of support on Friday. The S&P 500 has traded in an incredibly narrow range for most of the past couple of months. The long-term trend remains up, and the RSI is still in the bull range. Therefore, a breakout to new highs cannot be ruled out.
The Nasdaq 100 has also been trading in a tight range and was also subject to a break of support on Friday. As with the S&P 500, the trend remains up, and new highs remain very much within range.
The Dax had a spike lower on Monday, forming a very wide range day, the range of which remained intact for the remainder of the week. The low of the week was just below key support but did just about hold the trend line. The trend remains up here too, and the RSI remains in the bull range.
The energy markets backed off from their recent highs this week, but with the exception of RBOB Gasoline, remain in long-term uptrends. We could quite possibly see upside breakouts this week in a few of the energy markets, particularly Natural Gas.
Copper has moved sharply lower this week, accelerating away from its 50-day moving average. A resumption of the long-term downtrend could be seen soon. The other metals have all seen continued weakness, but remain in long-term uptrends. The strongest metal continues to be Palladium, which has held above support this week.
The grains markets remain weak and in long-term downtrends. Wheat has already broken to a new low for the current move and other markets in the sector could follow suit this week.
As has been the case overall for much of the past couple of years, there is little to be bullish about in the commodities sector, with the majority of commodity markets still in long-term downtrends. Most of the best trading opportunities in these markets remain from the short side.
The dollar put in a big move higher on Friday against many of the majors. This move was also seen clearly in the dollar index where the market close above its 50-day moving average. We may see a test of the 200-day moving average this week, which is currently at 95.83.
The Euro, which is a close inversion of the dollar index, moved sharply lower on Friday and closed below both its 50 and 200-day moving averages. The long-term trend is still up for the Euro, but a change of long-term trend to down is within range. A break of the sideways consolidation that the Euro has remained within for many months will likely result in a large move once the breakout is completed/
Interest rate futures
Interest rate futures moved lower this week, with the shorter-term markets being the weakest. The 3-month Eurodollar moved below its 200-day moving average and broke a key level of structural support, indicating lower levels ahead. The 3-month Eurodollar is the first market in the sector to complete a change of trend to down. The trend remains up for the remaining markets, but that could change over the coming weeks.