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 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.
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.
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.