The past week has seen the Nasdaq 100 make new all-time highs but then pull back from those highs towards the end of the week. The dollar has had a mixed week with new highs for the current move being seen in the Dollar Index and a few of the majors, but a reversal was seen during the latter part of the week.
The long-term trends remain up for stocks and the dollar, down for interest rate futures and mixed for commodities.
From last week on the Nasdaq 100: “The one negative is that there is a bearish divergence between price and RSI, which indicates a slight weakening of momentum.”
The S&P 500 did have an expansion of volatility this week as expected, particularly on Tuesday where there was a sharp move lower which we swiftly reversed, keeping the uptrend intact.
The Dax has seen considerable weakness over the past two weeks following the failure to breakout above 13186. Price has fallen back to the middle of the range between the late January high and the March low. A head and shoulders pattern is forming on the weekly charts, but additional weakness is required to complete the pattern.
Last week on Copper: “The Commitment Of Traders (COT) profile has large speculators at a record net long position, so with the market being unable to breakout to the upside this week we may see a further unwind of long positions and continued weakness.” Weakness continued this week, and a downside breakout is very much within range early this week. Commercials have a record net short position which suggests weakness will continue and support will be broken this week, resuming the long-term downtrend.
Gold fell to new lows for the year and may continue to decline towards the next level of support around $1250. Silver and Palladium have also seen weakness and the long-term downtrend could resume this week.
The energy markets saw a significant bounce on Friday. Crude Oil was higher by 5.71% on Friday and 7.86% on the week. The long-term trend remains up across the sector, and we may see continued strength back towards a test of the May highs.
The dollar saw continued strength this week until a reversal on Thursday. The long-term trends currently favour the dollar, but a correction has been overdue with sentiment being extremely negative for most of the majors. Typically, when sentiment gets this low, a short-term reversal, correcting the prior trend is not too far away. We have seen some of that this week with several majors bouncing higher from their recent lows.
Interest rate futures
The long-term trend remains down for interest rate futures, and the markets continue to consolidate in a narrow range. Volatility has compressed on both daily and weekly charts, and this suggests that a range expansion will be seen soon. For now, these markets remain rangebound.