Weekly Update 30 July 2017 – LS Trader

U.S. stock indexes made new all-time highs yet again and the U.S. dollar continues to weaken almost across the board. Interest rate futures are in a random rotational two-way trading environment and may remain so for a few weeks yet. Commodities remain mixed, with metals and energies both having good weeks and continuing their recent recoveries.

Stocks

The S&P 500 rose to new all-time highs again this week but continues to trade in a narrow range in what is still a low volatility environment in spite of the large bar by recent standards printed on Thursday.

The Nasdaq 100 also printed a new all-time high on Thursday but fell just shy of the 6000 level. A sharp drop followed the high, but the lows were rejected on Thursday and Friday, which keeps the uptrend intact.

The Dax, which remains the weakest of the four indexes that we trade at LS Trader, decline further this week and is now well below its 50-day moving average and heading towards a test of its 200-day MA and quite possibly a change of trend to down over the coming week or so.

Commodities

From last week: “Gold had a decent week, keeping the long-term uptrend intact. Volatility is expanding, and price may continue higher towards 1300 level over the coming week or so.” Gold advanced again this week, reaching a high of 1277. The RSI has broken cleanly above the 60 level and looks set to continue higher to test the double top around the $1300 level.

Also from last week: “Copper reached its highest level since early March and could be poised to complete a trend change to up if it can successfully breakout from a five-month consolidation.” Copper completed a nice breakout and change of trend to up, reaching its highest level since May 2015 in the process.

Currencies

From last week on the dollar index: ”The dollar index fell to its lowest level since June 2016 and could be heading lower for a test of major support at 91.88. Volatility is expanding to fairly elevated levels so we may be nearing the point of a correction, but the long-term trend remains firmly down.” The index fell to new lows for the current move again, but volatility is reaching very elevated levels, currently at its highest levels since September 2014

The Euro, which is the inverse of the dollar index, continues to move towards our target at the 200-week MA (currently at 1.1844). Volatility is naturally elevated at these levels, but as with the dollar index, that does not mean that a reversal is imminent. Some cooling off and a correction towards fair value could be seen in both markets, but the trends are well established and intact.

Interest rate futures

Interest rate futures continue to consolidate around their 50 and 200-day MAs, both of which are nearly flat, and the RSI is also moving sideways in the region of the 50 level. Add to these declining volume and volatility, and it’s evident that this sector is in a sideways chop that is best avoided until resolved.

Good trading

Phil Seaton

LS Trader

Weekly Update 23 July 17 – LS Trader

U.S. stocks made new all-time highs again this week, and the dollar continues to weaken across the board. Interest rate futures continue their recent recovery and remain in long-term uptrends. Commodity markets remain mixed for the most part as they continue to build up for the next major move.

Stocks

Both the Nasdaq 100 and the S&P 500 hit new all-time highs this week, and both made new all-time weekly high closes. Price action has not been convincing following the breakout and volatility, and volume remains subdued.

The Dax fell to its lowest level in four months and this week’s low fell within the large gap printed back in April. Price is now decisively below its 50-day MA and may head lower towards its 200-day MA, currently at 11906. The Dax is the weakest of the four indexes we trade at LS Trader and may complete a change of trend to down over the coming weeks.

Commodities

Gold had a decent week, keeping the long-term uptrend intact. Volatility is expanding, and price may continue higher towards 1300 level over the coming week or so.

Copper reached its highest level since early March and could be poised to complete a trend change to up if it can successfully breakout from a five-month consolidation.

The energy markets reached their highest levels in six weeks but the breakout was rejected, and prices moved lower into the week’s close. The long-term trend remains down and a breakout to the downside to resume the downtrend remains on the cards.

The grain markets have seen increased volatility in recent weeks, and that appears to be the new norm. This is a good thing as it will result in some large trends over the coming months. Oats remains the strongest of the grains markets at present and the highs printed at the start of July could be tested this week. A successful breakout would firm up our longer range target of 350.

Currencies

The dollar index fell to its lowest level since June 2016 and could be heading lower for a test of major support at 91.88. Volatility is expanding to fairly elevated levels so we may be nearing the point of a correction, but the long-term trend remains firmly down.

From last week on the Euro: “Further strength this week could see an additional rally towards the area of the 200-week MA, over the coming weeks.” The Euro continued its advance and may test the 200-week MA (currently at 1.1844) this week as the dollar continues to weaken across the board. The Euro matched its 2015 high to the pip this week, and a breakout here could open the way to a few hundred more pips. Long Euro/USD is currently our most profitable open position, with 703 pips profit since we went long back on the 25th April.

The Australian dollar tested the 8000 level but has so far been unable to break through. Our target at 8400 remains in place. The other two commodity based currencies are also doing well.

The British Pound posted another new high since September last year but fell back before a slight recovery on Friday.

Interest rate futures

Interest rate futures continue their recovery following the correction that began late last month. Price has moved decisively above both the 50 and 200-day MAs, and the RSI is testing the 60 level. If we see a decisive move above 60 on the RSI, we may see a test of the local top in these markets, printed during the last week of June. The long-term trend remains up across the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update 16 July 2017 – LS Trader

U.S. stocks have recovered this week as the S&P 500 printed a new all-time high. The Dow 30 also made new all-time highs. The Nasdaq 100 has also rallied to within range of new all-time highs and could complete the treble this week. Other global stock markets continue to lag.

Stocks

From last week on the S&P 500: “The RSI is also finding support above the 40-level and therefore remains in the bull range, and the long-term trend remains up.” The S&P 500 completed its recovery to push to a new all-time high and new all-time high close on Friday.

The Nasdaq 100 currently lags the S&P 500 and failed to print a new all-time high this week. However, price is now close enough to the local top to suggest that may happen this week. The RSI closed at 59.99, just a tick below the 60 level, a decisive break of which would be bullish. Volatility has also started to increase, but volume remains subdued.

Commodities

Silver’s collapse and recovery on the 7th July may turn out to be a blow-off bottom, but prices have yet to exceed the high of that bar and reenter the prior trading range. If they do, the downtrend is likely to be over or on hold. If resistance can hold firm at these levels, then lower prices may follow.

Silver’s recovery has seen similar price action with Gold, which has held just above key long-term trend defining support. A move below $1200 would be bearish, especially on a closing basis. The RSI remains bearish for Gold and volatility has contracted during the 5-day rally, suggesting that the rally is weak.

The grain markets underwent as substantial correction this week, largely due to a change in the weather from hot and dry, to unexpected thunderstorms. There is an old saying from the Chicago Board of Trade (CBOT) that ‘Rain makes grain’. Prices did recover some of the declines on Friday, and the trend remains up.

Currencies

The Euro crossed the 1.1500 level for the first time this year, and possibly significantly, closed the week above it basis the September contract. Further strength this week could see additional rally towards the area of the 200-week MA, over the coming weeks.

The Australian dollar decisively broke out of a rectangle that has been in place since April 2016. The upside target is in the vicinity of the 8400 level. The Canadian dollar continues to rally against the US dollar and rose this week to its highest level since September last year. The weakest of the commodity based currencies, the New Zealand dollar, still managed to reach a 6-month high.

The British Pound continues to shrug off Brexit and a huge amount of political uncertainty and has rallied to its highest level since September last year. There are a couple of technical patterns that suggest there is further to run, which generate targets between 1.33 and 1.3450. The RSI has cleared the 60 level, closing at a bullish 64.49, and price is also above prior resistance, as well as both the 200 and 50-day MAs. With the long-term trend remaining up, the technical picture continues to support the Pound.

Interest rate futures

Interest rate futures continue to consolidate in the area of the 200 and 50-day MAs. The long-term trend remains up for the sector, but price action is currently neutral.

Good trading

Phil Seaton

LS Trader

Weekly Update 9 July 2017 – LS Trader

The past week was a shortened trading week due to the Independence Day holiday in the US on Tuesday. Trading volumes have been fairly light as expected. The big moves have come in the current markets where we have seen considerable strength in the grains markets and weakness in metals and energies.

Stocks

The S&P 500 closed below the trend line that we referred to last week but continues to find support at the 50-day moving average. The RSI is also finding support above the 40-level and therefore remains in the bull range, and the long-term trend remains up.

The Nasdaq 100 ended the week flat but has now closed for six straight sessions below the 50-day MA. Price movements in the Dax are very similar to the Nasdaq 100, where price remains between the 50 and 200-day MAs.

The Nikkei, which has been the stronger of the indexes inasmuch that it has held up better than other global indexes also succumbed to weakness this week by breaking short-term support. Support has so far been found at the 50-day MA.

For now, the long-term trend remains up for all global indexes that we trade at LS Trader.

Commodities

From last week: “Price is now below the third fan of a 3-fan principle set up which may lead to a decline all the way back to the ‘V’ bottom printed back in December, at $1133 basis the back-adjusted continuous contract, in other words, around $110 below current levels.” Gold continued to decline this week as expected and is on the cusp of a change of long-term trend to down. The RSI has moved decisively into the bear range.

Silver also declined this week, which included a spike move lower on Friday which saw a sharp drop to 1434, before a recovery to close at 1542.5, down 7.22% for the week. The long-term trend remains down for Silver.

The energy markets ran out of steam in the vicinity of their 50-day MAs, and have turned lower again. The prospect of new lows remains in place.

The grains markets have seen some very large moves and volatile price swings. Wheat rallied from 463.5 two weeks ago to 574.5 on Wednesday before falling back to close the week at 535. The Soybeans complex has also seen bullish trade, as the grains complex continues to build a bottom.

Currencies

The currency markets continue to be mixed. The long-term trend on balance remains down for the dollar. The Dollar Index itself is trading just above its lowest levels in a year, having closed the week up by 0.39%.

The Euro dipped in midweek but recovered by the end of the week, but so far remains unable to cross the 1.15 level, which markets a considerable resistance zone. If resistance can be decisively broken, we could see further strength towards the area of the 200-week MA, currently at 1.1849.

The Canadian dollar continues to rally against the US dollar and rose this week to its highest level since September last year.

Interest rate futures

Interest rate futures have seen persistent weakness for the past two weeks. The long bond has this week fallen and closed below its 50 and 200-day MAs, and the RSI has also fallen through bull market support at the 40 level. These are not bullish characteristics, at least in the neat term, and price finds itself back to the middle of the range that has been in place since December last year.

The UK Long Gilt has seen sufficient weakness to bring a change of long-term trend to down within range, and we could see a change of trend completed over the coming week or so.

Good trading

Phil Seaton

LS Trader

Weekly Update 2 July 2017 – LS Trader

Stock indexes have seen an increase in volatility, and we are seeing some daily price swings that are inconsistent with price action that has been seen in the last couple of years. This suggests that the personality of the stock markets is changing and that we are on the cusp of seeing a volatility explosion from the narrow trading range conditions that have dominated the markets recently.

This week will be a shortened trading week due to the US Independence Day holiday on the 4th July, which also sees markets closing early on Monday.

Stocks

As mentioned above, there has been a shift in personality in the stock indexes this week, and this includes the S&P 500. Three well above average bars were printed in succession on the daily chart, the last of which penetrated the trend line that has been in place from the November 2016 low and the 50-day MA. However, both of these were reversed and held on a closing basis. We may see a further increase in volatility and further declines if both of these are decisively broken on a closing basis. However, with the long-term trends still being clearly up for global stock indexes, it’s still possible that last week’s dip was a bear trap. Time will tell.

From last week; “The Dax continues to undergo significant volatility compression, and support and the 50-day MA look likely to be tested soon.” The Dax broke support and closed below its 50-day MA for the first time since early December last year. Volume and volatility have both expanded along with the decline, which suggests further weakness ahead.

The Nikkei came within 5 points of its high from earlier in June but pulled back to support, and almost to its 50-day MA. The trend remains up for the Nikkei, which is holding up better than other indexes.

Commodities

Commodities have had, on balance, a pretty bullish week. The grains markets, in particular, have seen considerable strength, as have the energy markets, which have reversed some of their recent declines.

Not all commodities have been bullish. The metals have seen mixed trading and some weakness in Gold, Palladium and Silver. Gold is now back below its 50 and 200-day MAs and is trading just above short-term support. Price is now below the third fan of a 3-fan principle set up which may lead to a decline all the way back to the ‘V’ bottom printed back in December, at $1133 basis the back-adjusted continuous contract, in other words, around $110 below current levels. Copper is the exception in the metals markets, making a 3-month high on Friday.

Currencies

From last week on the Dollar Index: “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.” Weakness continued this week for the dollar, and the index fell to new lows for the move, down to its lowest level since October last year.

The Euro rallied to its highest level since August last year but is currently finding resistance at those levels as there are multiple resistance levels in the zone.

The British Pound has continued its recovery and has now rallied over 400 pips from the June 21st low, which keeps the long-term uptrend intact and has the Pound back to testing this year’s high.

Interest rate futures

Interest rate futures made new highs for the current move before reversing sharply. The 30-year T-Bond fell back exactly to its 50-day MA, and not far above its 200-day MA. Volume has also increased during the decline, but the long-term trend is still up for now.

Good trading

Phil Seaton

LS Trader