Weekly Update 25 June 17

The S&P 500 made a new all-time high, as did the Dow, but other stock indexes lagged. Stock indices are trading in a very narrow range. Interest rate futures are also trading in a narrow range near the recent highs. The commodities markets remain mixed, with energies, soft commodities and some grains markets remaining under pressure.

The long-term trends remain as before, up for stocks and interest rate futures, down for commodities and mixed for currencies. The latter remains mostly confined to historically narrow trading ranges, which when eventually cleared will likely result in directional trading campaigns that could last a year or two at least.

Stocks

The S&P 500 made a new all-time high on Monday, but that was reversed the next day. The market closed slightly up on the week but continues to trade in a very narrow range.

The Nasdaq 100 continued to find support from the 50-day moving average and ended the week up, but still lags the S&P 500 following its steep sell-off two weeks ago.

The Dax continues to undergo significant volatility compression, and support and the 50-day MA look likely to be tested soon. The Nikkei has regained the 20,000 level and continues to grind gradually higher in a far from convincing manner.

Commodities

The energy markets saw continued weakness as Brent Crude dropped below the $45 level for the first time since April last year. Light Crude fell to $42.05 basis the August contract and may yet have further to run to the downside. The RSI fell to 25.68, which is a bearish reading. Volatility is getting elevated, but the trend for the sector remains down.

Cotton continues to collapse and has fallen from 84.66 to 66.33 in just over a month. There may yet be further declines towards the 60 level. Weakness was also seen in the Soybeans complex as both Soybeans, and Bean Meal fell to new lows for the current move.

Sugar also fell to new lows for the current move, printing its lowest price since February 2016. Volatility is elevated at daily and weekly levels, but price has not stretched too far from fair value to suggest that a reversal is imminent in spite of a small bounce on Friday. The next target is the 12.61 level, which is last year’s low.

Currencies

The Dollar Index pushed slightly above resistance early in the week but eased lower towards Friday’s close. The trend remains down for the Index, and the rally was unable to take the RSI anywhere near the 60 level. The RSI, therefore, remains in the bear range and we may see further weakness back towards last week’s low.

The Euro held on to support by the matter of a few pips and remains in an uptrend with volatility declining to very low levels, levels not seen since October 2015. This suggests a large price move is in the offing.

Interest rate futures

The 30-Year T-Bond rallied to new highs for the current moved made its highest weekly close since November. The trend remains up for the interest rate futures sector, but the longer-term markets remain the strongest.

Good trading

Phil Seaton

LS Trader

Weekly Update 18 June 2017 – LS Trader

The past week has seen mixed trading in many markets, especially in stocks and currencies. Interest rate futures have had a fairly bullish week and pushed to new highs for the current move. Commodities markets have seen some decent moves in a handful of markets.

Stocks

The S&P 500 fell just short of a new all-time high but continues to trade in a very narrow range between all-time highs and short-term support. The long-term trend remains up.

The Nasdaq 100 ended the week lower and was unable to make any progress into the large bearish bar that we discussed last week. As we wrote previously, it will take a significant move to reverse that sell-off which occurred on very high volume, thereby leaving a significant bearish footprint on the chart

The Dax has made no progress over the past six weeks and continues to undergo volatility compression. The RSI is also moving sideways just above the 50 level indicating a lack of directional trend. The Nikkei is also trading sideways, hovering around the 20,000 level.

Commodities

From last week following Gold’s failure to break key resistance: “That price action was not a valid breakout, and the failure could even be argued as being bearish, not bullish. Price needs to cross and ideally close above $1300 to confirm the breakout.” Gold continued with weakness this week and has closed below the 50-day moving average but has also found support right on the 200-day MA. Volatility is also undergoing significant compression.

Silver remains weaker than Gold and remains in a long-term downtrend having been unable to complete a change of long-term trend to up. There’s a possibility of a breakout through support over the coming weeks.

The energy markets saw further weakness this week as prices fell to new lows for the year in a couple of markets in the sector. Crude Oil bounced from just ticks above support, but that level may be tested this week. The trend remains down for energies.

Currencies

The dollar has had a mixed week as the dollar fell to new lows basis the Dollar Index but then reversed higher to test resistance. The long-term trend is down for the dollar.

The Euro traded inversely to the Dollar Index and just narrowly held above support. Friday’s bullish piercing line keeps the uptrend intact for now, but there’s a good possibility that support will be tested again on the Euro as will resistance on the dollar index.

The British Pound gained a little ground this week following the battering it took after the General Election. Price has so far been unable to close back above the 50-day MA, but the long-term trend is still technically up.

Although we had rolled our open currency trades forward to the September contract during the previous week, the June contract expired this week, leading to the usual spike in volume. This spike can be ignored as it is just the normal rollover volume.

Interest rate futures

Interest rate futures tested support and pushed higher to post new highs for the current move. The longer-term markets continue to outperform the shorter-term interest rate futures, but the entire sector remains in an uptrend.

UK Long Gilts have seen some price swings this week having posted new highs for the move, but falling just short of the all-time highs printed back in August last year. Subsequent price action saw Gilts pull back and test support once again. We may see support and the 50-day MA tested again this week, but the trend remains up.

Good trading

Phil Seaton

LS Trader

Weekly Update 11 June 2017 – LS Trader

The General Election result delivered a shock to the UK and the British Pound, but the result was quickly brushed off by the FTSE 100. The FTSE had gapped lower at the open but printed a strong bullish reversal and ended the day higher by 0.97%. Much of this recovery is likely due to the prospect of a weaker pound benefiting equities.

The UK was not the only country that saw a large move as the Nasdaq 100 reversed sharply lower having hit slight new highs earlier in the day. The trend for global stocks remains up.

Stocks

Tech stocks took a battering on Friday, and a large one-day key reversal bar was printed on the chart, accompanied by a near 370% increase in volume. Such a move may mark the top in tech stocks as it will take a significant move to reverse Friday’s sell-off which occurred on very high volume, thereby leaving a significant bearish footprint on the chart. From the bullish perspective, Friday’s close remained above the prior high printed on the 16th May, so technically we still have higher highs and higher lows. The long-term trend is up.

The S&P 500 also had a fairly volatile day but not to the same scale as the Nasdaq 100. The S&P 500 printed a doji, having been both higher and lower during the day but closing the day almost flat, down by 0.08%. The Nikkei also moved lower and closed the week back slightly below the 20,000 level at 19,960 basis the September contract. Quarterly stock index futures rolled to the September contract on Friday.

Commodities

Gold tested the $1300 resistance level and the trend line from the 2011 all-time high but did not close above it. The intraday breakout seen on Friday occurred on significantly lower volume, and prices quickly broke back below the trendline. That price action was not a valid breakout, and the failure could even be argued as being bearish, not bullish. Price needs to cross and ideally close above $1300 to confirm the breakout.

Palladium, on the other hand, did continue higher after the successful breakout the week prior and experienced a volatile day on Friday where prices shot up to 891.35 before falling back to lose at 856.20, but still higher for the day and the week.

Currencies

The British Pound was the big mover in the currency markets as the General Election shocked the markets. The British Pound gapped lower by over 200 pips on Friday morning as the election outcome put the UK into turmoil. This price gap took the pound back below its 50, and 200-day moving averages and price dropped below the 40 level on the RSI. However, the long-term trend, for now, is still up. Friday’s candle is known as a long-legged doji, a pattern which represents total indecision, which is very apt for the UK political scene!

The weakness in the pound did not filter through into other currencies. Even the Euro held up much better and remains above support and in a long-term uptrend.

The dollar index fell to new lows the current move in the middle of the week but recovered slightly to end the week higher. The trend remains down.

Interest rate futures

Interest rate futures pushed to slight new highs for the week before closing marginally lower. The uptrend remains intact for now, but prices are only just above support levels.

Good trading

Phil Seaton

LS Trader

Weekly Update 4th June 2017 – LS Trader

US stocks rallied to new all-time highs again this week as global stocks remain bullish. The dollar has continued to weaken, and interest rate futures have seen renewed strength.

The week ahead sees some key events. On Thursday we have the UK General election, and the European central bank meets. In the US, former FBI Director James Comey will offer testimony to the Senate. These events could all contribute to further increases in volatility as many asset classes continue to move out of the long-standing low volatility environment.

Stocks

The Nasdaq 100 and the S&P 500 both continued their recent bullish price action to print new all-time highs this week and for a change did so on increasing volume. This week’s breakouts to new highs on both indexes have been accompanied by above average volume and have also seen volatility expand nicely into the trend zone.

The Nikkei has also closed above the 20,000 level for the first time since August 2015, as global stocks remain bullish.

Commodities

Gold continues to grind higher and may yet reach the April high at just over $1300. Volatility is quite elevated in this market, which is a negative factor at present for a continued advance much beyond this year’s highs.

Several commodities fell to new lows for their current moves. Coffee declined to its lowest level in a year on increasing volume and volatility. The RSI has also fallen below the 40 level so further declines, possibly to the 120 area may lie ahead. Soybeans, Soybean Meal and Bean Oil also all declined to new lows for the current move.

Natural Gas broke out of a near 3-month consolidation to the downside and looks set to test this year’s low. The other energy markets also declined and are heading back down towards recent support levels.

Currencies

The Euro tested support on Tuesday but then rallied to new highs for the current move, falling just shy of the 1.1300 level. The current target is the spike high printed back on the 9th November at 1.1411.

The dollar index declined to its lowest level since that same date in November, and the volatility profile suggests there is room for further declines, at least to 95.65, where the next level of chart support is likely to be found.

Interest rate futures

Interest rate futures got back on track this week as the 30 Year T-Bond, and the 5&10 Year T-notes rallied to new highs for the current move. The trend remains up for interest rate futures.

Good trading

Phil Seaton

LS Trader