The stock markets remain at a critical juncture and saw some chart damage done at the end of the week. This will put the uptrend under pressure in the short-term next week and these markets need to open with strength or support will likely be tested and broken. Bullish sentiment remains high in the S&P 500 but not dangerously so.
The S&P 500 made a new high for the current move but had a relatively sharp reversal on Friday. However, the S&P 500 held up better than the Nasdaq 100, where price action on Thursday and Friday did some technical damage. The uptrend in both markets is under pressure this week. However, the long-term trend remains up for both markets.
The Dax has continued its recovery from the June sell-off, and the Dax and the Nikkei are both within range of a long-term trend change to up. Whether we see that trend change this week remains to be seen. The Nikkei is undergoing significant volatility compression and volatility is now at its lowest level since just before the March low and a rally of almost 3000 points in under two months. A big move is in the offing, and at present that move could be up or down.
The CRB Commodity Index ended its run of eight consecutive weekly declines, managing a meagre 0.2% gain for the week. The long-term trend remains down for most commodity markets with only a few exceptions.
The metals markets have had a mixed week, but all remain in well-established long-term downtrends. Palladium has been the strongest in the short-term, with a sharp counter-trend rally from the recent lows.
The energy markets have seen some strength this week but remain some way off their recent highs. The long-term trend remains up for now, and recent price action since the May/July highs is corrective.
The grains markets have also seen some corrective price action this week against the prevailing long-term downtrend. Only Rough Rice is currently in an uptrend, but Wheat has shown considerable strength for much of this month and could breakout this coming week.
Price action in the currency markets remains corrective in the short-term, with the long-term trend continuing to favour the dollar. Currently, we have two open positions in the currency markets, short British Pound and short the Swiss franc. Several of the remaining majors are within range of breakouts this week.
Interest rate futures
In spite of the near-record long position that commercials hold in interest rate futures, as reported in the commitments of traders report (COT), interest rate futures have been unable to gain any traction and complete a change of trend to up. Weakness has been seen this week, and we may see further selling and a possible test of the recent lows. The long-term trend remains down for the sector.