Weekly Update – 25 March 2018 – LS Trader

Global stocks took a heavy hit this week, ending the week sharply lower. Sentiment has become extremely negative for stocks, so with the long-term trend remaining up for US stocks, it is possible that we will see a bounce higher this week, but things look to be taking a turn for weakness in the longer-term. For the first time in a long time, we have no long entries for any of the stock markets and look likely to add to our short positions over the next week or so on sell triggers.

Stocks

From last week on the Nasdaq 100: “The decline below the prior January high has bearish implications so we may see further weakness this week”. The Nasdaq began the week with weakness and continued sharply lower, ending the week down 7.06%. However, along with the S&P 500, the long-term trend is still up. Additionally, sentiment has become extremely negative with only 10% bulls. The last time sentiment was this low was the end of the early February sell-off. A substantial rally followed.

The Nikkei completed a change of long-term trend to down on Friday and joined the Dax in a long-term downtrend. However, the Nikkei is currently the weakest of the four stock indexes that we trade at LS Trader based on the current chart structure. The Nikkei ended the week lower by 5.89%

Commodities

From last week on Brent Crude: “Support from the triangle held exactly, and we saw a breakout of the triangle on Friday, which suggests further strength ahead. The trend remains up.” Brent Crude continued to rally and will likely breakout to new highs for the current move early this week.

The rally in the grain markets appears to have fizzled out, and we have gone from being net long the grains sector to short. Soybean Meal remains the strongest in the sector and may rally to test the local top in the coming weeks.

Gold held support and has rallied sharply over the last three days and may now press higher towards resistance. Silver broke out to the downside on Tuesday but was unable to continue lower and has since rallied back to test resistance. The trend remains down for Silver.

Currencies

The currency markets remain quiet, as they have for the past few weeks. The long-term trend remains against the dollar. The Dollar Index and the Euro remain rangebound.

The Yen has rallied to its highest level against the dollar since November 2016. There is bullish divergence on USD/JPY, but for now, the trend remains against the dollar.

Interest rate futures

Interest rate futures continue to grind higher in a counter-trend move. The long-term trend remains down across the sector, but moderate strength continues to be evident in the short-term. The shorter-term markets remain the weakest for now, but they are likely to test resistance this week. It is possible that resistance will hold as there is short-term bearish divergence where we have a new high in price without a new high in momentum.

Good trading

Phil Seaton

LS Trader

Weekly Update – 18 March 2018 – LS Trader

This week sees the FOMC Meeting with the Fed expected to raise rates in their announcement on the 21st March. This rate increase is already priced into the markets.

Overall, it’s been a quiet week in the markets, but things will likely pick up this week around the time of the aforementioned Fed announcement on Wednesday.

Stocks

The Nasdaq 100 began the week with strength as expected, printing a new all-time high on Wednesday at 7214.5 on Tuesday before pulling back for the rest of the week. The decline below the prior January high has bearish implications so we may see further weakness this week, but for now, the trend is still clearly bullish, and the market is above support.

The S&P 500 also began the week with strength but was unable to continue the rally. Volatility has declined sharply since late January. Friday saw a narrow range 7 bar printed, which is a good setup for a low volatility breakout in the direction of the open on Monday. The long-term trend remains up

Commodities

From last week: “Brent Crude has been trading in a symmetrical triangle pattern since late January….The long-term trend remains up, so the odds favour a breakout to the upside.” Support from the triangle held exactly, and we saw a breakout of the triangle on Friday, which suggests further strength ahead. The trend remains up.

Gold looks set to test the recent low, which if broken would have the downtrend back in effect with room for further declines down towards the mid-December low around $1240. Weakness is evident in all the metals markets at present. Silver is also close to a downside breakout. Silver is the weakest of the metals as it never completed a change of trend to up when the rest of the sector did.

Currencies

The currency markets remain quiet for the most part, likely waiting for this week’s Fed meeting before making their next move. The long-term trend continues against the dollar.

The weakest currency at present is the Canadian dollar which is back at levels not seen since June last year. The dollar rallied from support this week and ended the week higher by 2.2%.

Interest rate futures

The shorter-term markets remain the weakest in the interest rate futures sector. The long bond rallied to its highest level in over a month this week but pulled back on Friday. The long-term trend remains down across the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 11 March 2018 – LS Trader

The past week has seen bullish price action in US stocks, led higher by the Nasdaq 100 which made a new all-time weekly closing high on Friday. That is not a bearish characteristic.

Multiple other markets have continued to consolidate as they digest the recent spike in volatility. The long-term trends remain as before, up for stocks, mixed to up for commodities, and down for the dollar and interest rate futures.

## Stocks

From last week: “The Nasdaq remains the strongest of the stock indices and new highs are still a possibility and could be seen this week.” As expected, the Nasdaq 100 rallied to new all-time highs this week. Perhaps of significant importance is that fact that the breakout occurred on Friday, with a close above the breakout level.

As we have been saying for years, the most important price of the week is Friday’s close, as that is the price that traders are willing to hold their positions over the weekend. It carries even more importance in recent times due to 24-hour markets and, therefore, daily closing prices having less significance than they once did. Another bullish factor is that Friday’s breakout completed a cup and handle continuation pattern. Also, Friday’s close took the RSI back into the bull range, above 60.

The S&P 500 also continues to recover and is within range of a breakout to new highs. The Dax and Nikkei both remain weaker, with the Dax already in a long-term downtrend. The long-term trend for the Nikkei remains up.

## Commodities
Brent Crude has been trading in a symmetrical triangle pattern since late January and is now at the point along the triangle towards the apex where a breakout can be expected. Technically, that breakout is already late and overdue. The long-term trend remains up, so the odds favour a breakout to the upside. A similar pattern can also be seen in Light Crude.

However, it’s not all bullish for the sector as both Heating Oil and RBOB Gasoline have potential head and shoulders top patterns forming. These are not perfect patterns as the right shoulder is much shorter in time duration than the left shoulder. However, a break of the neckline in both markets would result in a change of long-term trend to down, and the breakouts would have very favourable asymmetric risk/reward.

Gold ended the week flat and has seen weakness since the failure to push through resistance from the September high. A break of the recent low would have bearish implications.

## Currencies
The currency markets have been quiet for the past couple of weeks, but the trend remains against the dollar.

## Interest rate futures
Interest rate futures have consolidated this week but remain in long-term downtrends. The shorter-term markets remain the weakest of the sector. The 10 Year T-note and 30 Year T-Bond are within range of new downside breakouts.

Good trading

Phil Seaton
**LS Trader**

Weekly Update – 4 March 2018 – LS Trader

The stock market ended the week lower but closed well above the lows. The Dollar Index ended the week almost flat but had been higher during the week. The long-term trends remain intact, up for stocks, down for the dollar and interest rate futures, and mixed for commodities.

Stocks

Four days of selling in the S&P 500 ended on Friday as the market bounced nicely from the lows of the day. Volatility continues to expand in the stock market as it has throughout February. The long period of low volatility in stocks appears to be over. It is interesting to note that the ATR in the S&P 500 began the year at 17. On Friday it ended the week at 69, so the current daily range in the S&P 500 is now four times what it was at the start of January, just two months ago.

From last week: “The Nasdaq 100 leads the way and may test all-time highs this week, with a breakout to new all-time highs a real possibility.” The Nasdaq 100 began the week with strength did not make new highs as a bearish engulfing pattern printed on Tuesday, and the market headed lower until Friday, where support was found in the vicinity of the 50-day moving average. The Nasdaq remains the strongest of the stock indices and new highs are still a possibility and could be seen this week.

The Dax remains the weakest of the four indexes we trade but bounced from support on Friday in concert with other global stock indices. If last week’s low is taken out, there is considerable room for further declines. One possible target could be the 200-week moving average, currently at 11037.

Commodities

Gold is roughly in the middle of its recent range between circa 1370 and circa 1240. It is also between its 50 and 200-day MAs, both of which are flat. This indicates, along with a neutral RSI, no trend in the short-term. However, a break from this range could yield a large move in the direction of the breakout, but we may need to wait a few weeks for either to occur.

Silver tested support this week but narrowly held on. A downside breakout could be seen thus week.

Soybean Meal had another bullish week, gaining 3.38% in spite of some weakness on Friday. Price briefly crossed the 400 level for the first time since July 2016. Soybeans was also bullish and experience a weak day on Friday with a long upper wick as well.

Currencies

The Euro’s price action on Wednesday and Thursday may turn out to be a bear trap as medium-term support was violated and then quickly reversed, with price regaining the 50-day moving average. The trend remains up for the Euro in spite of recent dollar strength.

USD/JPY resumed its downtrend this week having earlier broken out of a 10-month rectangle. Price targets from that suggest that we may see further weakness down towards the 100 level.

USD/CAD briefly cleared resistance on Friday but has yet to make any upside progress. If it can make a decisive breakout this week, there is plenty of room for further rally.

Interest rate futures

The trend remains down for interest rate futures in spite of some midweek strength. Friday saw a reversal which kept the downtrend for the shorter-term markets intact. The 10 Year T-note and 30 Year T-Bond may both head down to test their recent lows.

Good trading

Phil Seaton

LS Trader