Weekly Update – 29 April 2018 – LS Trader

This week sees the 2-day FOMC meeting begin on Tuesday so we may see a quiet start to the week followed by an increase in volatility on Wednesday.

From last week: “Further breakouts and resumptions of the primary trend could follow this week, especially in the interest rate futures sector, where new lows for the year are within range.” This past week did see further breakouts, which included the 10 Year T-note. The 30-year T-Bond is one of several markets within range of breakout this week.

Stocks

Stocks have had another volatile but ultimately indecisive week as we have a second consecutive indecision bar printed on the weekly charts. Volatility has been higher on the Nasdaq 100 than it has been on the S&P 500 but both markets have closed the last two weeks roughly where they began them in spite of a couple of sizeable round trips.

The commitment of traders data shows that commercials have their biggest long position since late 2011 on the Nasdaq 100, and are net long where large speculators are net short. This is a fairly rare position and is typically bullish. The long-term trend remains up for US stocks but down for the Dax and the Nikkei.

Commodities

From last week: “Lumber, which is currently in a huge bull market, printed new all-time highs again this week and still has potentially further to run.” Lumber continues to run and shows no sign of stopping at present. There is no bearish divergence in momentum. The only negative is that sentiment is extremely bullish.

Several commodities are within range of breakouts this week with a mixture of long and short breakouts in the offing. Grains are turning bullish again and may test key resistance, whereas metals are looking weak and may test support/breakout to the downside this week.

Currencies

From last week: “The Dollar Index is once again pushing up towards that key level of resistance which if successfully taken out may lead to a period of dollar strength. However, the long-term trend remains against the dollar.” The Dollar Index finally broke resistance but remains in a long-term downtrend.

However, dollar strength is becoming evident against several of the major currencies, having already broken out against the Swiss franc this week. A change of long-term trend is within range for the Australian dollar this week, where major support is likely to be tested.

Interest rate futures

From last week: “Both the 10-year and Long bond could also make downside breakouts this week. The trend remains down for the sector.” The 10 Year T-Note did break to new lows for the current move as yields crossed above 3%. The long-term trend is down for the 10 Year Note. However, there is potential bullish divergence evident on the daily chart but as yet no trigger. The 30-year T-Bond rallied from support but remains in a long-term downtrend, and the trend remains down for the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 22 April 2018 – LS Trader

From last week: “Many markets have corrected against their primary trends over the past few weeks, but several looks set to resume their longer-term moves as early as this week.” This past week has been more active than the recent few weeks as multiple markets did breakout as expected. Further breakouts and resumptions of the primary trend could follow this week, especially in the interest rate futures sector, where new lows for the year are within range.

Stocks

The Nasdaq 100 ended the week higher by 0.5% but has printed a doji on the weekly charts with a long upper shadow. This has bearish implications for the short-term as a doji is an indecision bar, and the long upper shadow shows that the highs of the week are strongly rejected after the run-up of the past three weeks. The long-term trend is still up for the Nasdaq 100, but we’re now in the middle of the range with no short-term trend evident.

Price action in the S&P 500 has been very similar, and no short-term trend is evident. The same is true for the Dax and the Nikkei, but both are weaker than their US counterparts due to having fallen sufficiently in February to complete long-term trend changes to down.

Commodities

From last week: “Heating Oil and RBOB Gasoline could breakout this week.” Both Heating Oil and RBOB Gasoline did breakout this week but as yet have had little in the way of follow through. Both of these markets continue to lag the stronger Crude Oil Markets, with Brent Crude being the strongest at present.

Gold continues to coil in a range just below a key resistance level (neckline of a large inverted head and shoulders). The market could break either way at this stage but the breakout, when it comes, is likely to yield a big move. Silver was the stronger of the two precious metals but remains in a long-term downtrend for now. A change of trend to up is within range.

Lumber, which is currently in a huge bull market, printed new all-time highs again this week and still has potentially further to run.

Currencies

From last week: “The area around 90.50 is significant resistance for the Dollar Index as that level represents a change of polarity resistance from the September 2017 lows and also the high of this year.” The Dollar Index is once again pushing up towards that key level of resistance which if successfully taken out may lead to a period of dollar strength. However, the long-term trend remains against the dollar.

Interest rate futures

From last week: “Friday closed below the 50-day MA on the Long Bond, and we may see prices head back towards the February lows. The shorter-term markets in the sector remain weaker and could test support as early as this week. The long-term trend remains down across the sector.” The shorter-term markets did test support as expected and both the 3-month Eurodollar and 5 Year T-notes broke to new lows for the current move. Both the 10-year and Long bond could also make downside breakouts this week. The trend remains down for the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 15 April 2018 – LS Trader

The past week has been a continuation of the calm before the storm. Many markets have corrected against their primary trends over the past few weeks, but several looks set to resume their longer-term moves as early as this week.

The long-term trends remain mixed for stocks and commodities, but down for the dollar and interest rate futures.

Stocks

From last week: “The S&P 500 has closed right on its key 200-day moving average and remains perilously positioned above MA support and the February lows. For now, the trend remains up, but that picture could quickly change.” The 200-day MA held, and the market ended the week higher. However, Friday printed an indecision pattern on the daily chart with the high for the day just below the 50-day MA. Prices currently are sandwiched between the two MAs and could go either way.

The Dax’s recovery continued, crossing both the 50 and 200-day MAs this week, but finding resistance at the later and turning down on Friday. The long-term trend remains up for US stock indexes and down for the Dax and the Nikkei.

Commodities

Gold reached a high of $1369.4 this week before pulling back but remains within the range of a potential key breakout. There is an inverted head and shoulders pattern evident on the weekly chart which dates back to 2013 which if completed would give a target in the region of $1720, large upside potential.

The energy markets have got back on track, and their recent correct declines have come to an end, with both Light Crude and Brent Crude breaking out to new highs for the current move. Both markets made their highest print this week since late-2014. Heating Oil and RBOB Gasoline could breakout this week.

Currencies

From last week: “The area around 90.50 is significant resistance for the Dollar Index as that level represents a change of polarity resistance from the September 2017 lows and also the high of this year.” This resistance area continues to hold, and as long as it does the focus is towards lower prices for the Dollar Index.

The inverse is true for EUR/USD, which remains above its key support zone and may push higher this week. The British Pound continues to advance and may be set to test its January high soon. The RSI remains in the bull range, and the long-term trend remains up.

Interest rate futures

The long bond tested resistance again around the 147 level and once again turned lower, keeping the long-term downtrend intact. Friday closed below the 50-day MA on the Long Bond, and we may see prices head back towards the February lows.

The shorter-term markets in the sector remain weaker and could test support as early as this week. The long-term trend remains down across the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 8 April 2018 – LS Trader

Volatility in stocks has continued. The S&P 500 has closed right on its key 200-day moving average and remains perilously positioned above MA support and the February lows. For now, the trend remains up, but that picture could quickly change.

Stocks

US stocks ended the week lower and had big down days on Friday. For now, the long-term trend remains up but key trend-defining support are within range of being tested this week, and it’s possible that we could see a change of long-term trend to down completed in the next week or so.

The Dax finished the week higher by 0.49% but remains in a long-term downtrend, and the same can be said for the Nikkei. At present, the long-term trend remains up for US stocks but down for international stocks.

Commodities

The grains markets had a volatile week this week on speculation of tariffs affecting a few markets in the sector. However, the markets quickly shrugged that off and price action was strong on Friday. The long-term trend remains up, and we could see Corn and Soybean Meal breakout to the upside this week.

The energy markets have continued to decline this week, but for now, the long-term trend remains up for the sector.

Lumber resumed its long-term uptrend by breaking out to new all-time highs this week and could yet have further to run.

The metals markets remain mixed. Palladium has closed the week lower for six consecutive weeks, and for ten of the last twelve weeks. Silver remains in a long-term downtrend and is trading near support with a breakout to the downside possible. According to COT data, the small speculator as the most bullish it has been since 2009. Lasting rallies rarely commence when the small speculator is more bullish than commercials and large speculators.

Currencies

The Dollar Index has continued to make its counter-trend move but is at medium-term resistance, with the long-term trend remaining down. The area around 90.50 is significant resistance for the Dollar Index as that level represents change of polarity resistance from the September 2017 lows and also the high of this year.

The inverse, of course, is true for the Euro, which is now testing key support.

Interest rate futures

From last week: “The long bond is now in the zone between the 38.2 and 50% retracement levels of the decline from the December high, which is about the level that normally sees a correction of this degree fizzle out. The 50% retracement level is at 147.37.” The long bond turned lower at the expected resistance zone and traded lower until Friday. The long-term trend remains down for the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 1 April 2018 – LS Trader

The past week was a shortened trading week due to Good Friday, and Thursday’s close also saw the end of the first trading quarter of the year. The first quarter has been far more volatile in many markets than recent quarters but has also been profitable to trade in spite of some large swings in the markets. That volatility is expected to continue for the foreseeable future and should bring with it plenty of large moves and profitable trading conditions.

The long-term trends remain mostly as before, mixed for stocks, up for commodities (with a few exceptions), down for the dollar, and down for interest rate futures.

Stocks

From last week on the Nasdaq 100: “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.” Stocks bounced this week as suggested in last week’s update from extremely negative sentiment readings.

The long-term trend for US stocks is still up at monthly and weekly chart level but is turning negative on the daily timeframe. However, a change of trend to down for either the S&P 500 or the Nasdaq 100 has yet to be completed.

The Dax fell to new lows for the current move but reversed higher. However, the trend remains down, and the market is below resistance. The Nikkei also rallied and was strong enough to take out short-term resistance. The long-term trend remains down for the Dax and Nikkei but still up for the Nasdaq 100 and S&P 500.

Commodities

Brent Crude completed its highest monthly close in almost three years in spite of a bit of a pullback this week. The long-term trend remains up for both Crude markets, and new multi-year high monthly closes are not bearish.

After a few weeks of selling, some of the grains markets had extremely bullish days on Friday, namely Corn, Soybeans and Soybean Meal. This may indicate that the correction in these markets is over and the local top may be tested, with possible breakouts this week.

One important observation in the commodities markets is commercial buying of many commodities markets as reported in the COT data (Commitments of Traders Reports). This indicates that commercials are expecting inflation and higher prices and a likely bull market in commodities. Commercials are often early, so we have to wait for trend confirmation and buy triggers, but once these moves get going, they are likely to be big.

Currencies

The currency markets continue to consolidate, much as they have since the middle of January. The long-term trend remains against the dollar.

Interest rate futures

Interest rate futures have continued their short-term counter-trend rally this week and are now approaching levels that could provide resistance and a possible turn lower to resume the long-term downtrend.

The long bond is now in the zone between the 38.2 and 50% retracement levels of the decline from the December high, which is about the level that normally sees a correction of this degree fizzle out. The 50% retracement level is at 147.37.

Good trading

Phil Seaton

LS Trader