The past week was a shortened trading week due to the Thanksgiving Holiday in the US. However, there were some significant moves in stocks, energies and interest rate futures. The current long-term trends remain down for stocks, commodities and interest rate futures, and up for the dollar.
We had mentioned a possible head and shoulders bottom setting up on the daily chart of the S&P 500. That potential pattern failed this week as prices moved below what would have been the right shoulder low. Often failed patterns are the best ones to trade. If the October 29th low is broken, the downtrend will resume.
The Nasdaq 100 has already broken its equivalent low to print new lows for the current move, as has the Dax. The Nikkei is holding up slightly better than the other indices, but the long-term trend remains down for global stocks. This is a bullish time of year seasonally, but the current technical picture takes precedent, especially the primary trend.
The colossal collapse and bear market for energies continued this week with sharp declines in all markets except for Natural Gas. Natural Gas continues to trade counter to the rest of the sector and is in a bull market, but did end slightly lower this week after some volatile price swings.
Light Crude oil finished the week lower by 11.33%, Brent by 11.92%, Heating oil by 10.28%, and RBOB Gasoline, which was the biggest decliner, finished down by 12.64%. All four of these moves have been captured by the LS Trader system where we remain short these four energies and long Natural Gas, for five extremely profitable trades. The trend is still intact for all of them as of Friday’s close.
The uptrend for the dollar remained intact this week with the Dollar Index holding support and the Euro failing at resistance. The dollar remains in a long-term uptrend against all the majors.
Interest rate futures
Interest rate futures have had a bullish couple of weeks as prices have rallied sharply from support in what is, for now, a counter-trend rally. However, the rally has been of sufficient strength to bring a change of long-term trend to up within range for all markets apart from the 30 Year T-bond. As has been the case for several months, the commercials hold a huge net long position in interest rate futures, which means they continue to position for lower, not higher, interest rates (interest rate futures move inversely to rates.