Weekly Update – 25 November 2018 – LS Trader

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.

Stocks

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.

Commodities

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.

Currencies

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.

Good trading

Phil Seaton

LS Trader

Weekly Update – 18 November 2018 – LS Trader

This Thursday is the US Thanksgiving Holiday so it will be a shortened trading week as US markets will be closed on Thursday and have a shortened trading day on Friday.

Stocks

Stocks ended the week lower as the long-term downtrend remains in effect. As before, the Dax and Nikkei remain weaker than US indices. It’s possibly significant that the counter-trend rallies in the Nasdaq 100 and S&P 500, were unable to get beyond the 61.8% retracement levels and also did not get to the 60 level on the RSI. This keeps the RSI in the bear range.

However, it should be kept in mind that this is the strongest period of the year seasonally for stocks, so rallies cannot be ruled out. To change the trend back to up, new highs will need to be posted, which at present are out of range.

Commodities

Natural Gas has had a hugely volatile week with wild swings in both directions. However, in spite of the volatility, the trend remains bullish for Natural gas, and the market closed the week at its highest level in almost four years, up 17.88% for the week.

The other energy markets all remain in downtrends, with RBOB Gasoline the weakest, having fallen to its lowest level since August 2017.

The metals markets rallied for most of the week, but except for Palladium, all remain in along-term downtrends. Palladium rallied to a new all-time high.

Currencies

The Dollar Index posted new highs for the current move but ended the week lower. The long-term trend remains up for the index. There is some bearish divergence between price and RSI.

The New Zealand dollar continued its recent rally and is now on the verge of a change of trend to up. This would be the first of the majors to complete a trend change to up against the dollar. The Australian Dollar is also showing some signs of strength.

Interest rate futures

Interest rate futures have had a bullish week, but except for the UK Long Gilts, remain in a long-term downtrend. A change of trend to up for US interest rate futures, which means lower, not higher, interest rates, could be completed in the coming week or so if strength continues.

Good trading

Phil Seaton

LS Trader

Weekly Update – 11 November 2018 – LS Trader

The past week has seen mixed trading in multiple markets, with a change of long-term trend to down being completed in Crude Oil and Brent Crude. Stocks continued their corrective rally and are now at a key price zone. The dollar has resumed recent strength, and interest rate futures remain mixed.

Stocks

The S&P 500 rallied this week, reaching a 61.8% retracement of the October decline. It is possible that if prices decline back to around the 2700 area and find support, that an inverted head and shoulders pattern could be forming. Such a pattern, if completed, would project a rally back to new all-time highs.

The technical damage done at daily chart level recently cannot be disputed, and it has changed the daily and weekly trend to down, but a check of the monthly chart shows that the bull market is still intact at a higher degree of trend. A complete retracement of the October decline and new all-time highs cannot be ruled out over the coming months, particularly given that we are now in a strong period of the year from a seasonal basis.

The other stock indices have seen similar price action, but the Dax, and then the Nikkei, remain the weakest.

Commodities

From last week: “A trend change to down is within range for Crude Oil and Brent Crude, and that could be completed within the next couple of weeks.” The energy markets were weak this week, and a change of trend to down was completed for both Crude Oil markets as expected.

It’s possible to label the rally in Gold from the August low to be a bear channel, which is in keeping with the long-term trend being down. A close below 1200 would bolster this view and suggest that prices would retrace the rally from the August low in full and go on to post new lows.

We mentioned a possible head and shoulders bottom in last week’s update but said that even if the pattern completed that the long-term trend would be down. Prices fell well short of the neckline and have turned lower and may now test the right shoulder bottom. If this price is broken (264.25) that would completed a head and shoulders failure pattern and would project prices lower to around the 235 level.

Silver has already completed the head and shoulders failure and may break to new lows this week. The long-term trend remains down for all the metals except Palladium.

Currencies

The US dollar completed a break out the neckline of a head and shoulders pattern visible on the weekly chart back to July 2017. This breakout, which now has prices at their highest level since May 2017, projects higher to around the 1.1000 area, around 1000 pips higher than current prices.

The dollar index may post new highs for the current move this week.

Interest rate futures

Interest rate futures had a mixed week with the shorter-term markets being weaker than the longer-term. The 30 Year T-Bond began a rally back to the underside of the 5-week flag mentioned last week. If resistance holds, that pattern has a projected downside target in the 130 area.

The long-term trend remains down across the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 4 November 2018 – LS Trader

The past week has seen volatile price action in multiple markets, many of which have made corrective price moves against their primary long-term trends. The current trends are down for stocks, up for the dollar, down for interest rate futures and mixed for commodities.

Stocks

Stocks rallied sharply this week in what is corrective price action against the long-term downtrend. The corrective rallies were sufficient to end the trend in the short-term for both the Nikkei and Dax, but for now, the S&P 500 and Nasdaq 100 remain in current downtrends and below resistance.

It’s interesting to note that in spite of the sell-off over the past few weeks, the COT reports that large speculators on the S&P 500 have their highest net long position since 2013. Commercials remain heavily net short.

We’re entering into a seasonally bullish time of year for stocks, but the current technical picture always takes precedent. While there is no question that at monthly chart level stocks are still in a bull market, the weekly charts are less bullish, and the daily charts show a clear downtrend following the substantial technical damage done over the past few weeks.

Commodities

The metals markets have had a mixed week with some strong and weak days seen in all markets. The long-term trend remains down for the metals except for Palladium, which is still the leader. Copper has a potential inverted head and shoulder setup and may test the neckline this week. However, the long-term trend is still down.

The energy markets have seen additional weakness this week, but for now, the trend remains up for all markets except for RBOB gasoline, which completed a change of trend to down two weeks ago. A trend change to down is within range for Crude Oil and Brent Crude, and that could be completed within the next couple of weeks.

Currencies

The dollar saw some weakness this past week, which is also likely corrective against the long-term dollar uptrend. The dollar has been strongest against the Swiss franc, rallying this week to its highest level since May 2017.

Interest rate futures

Interest rate futures moves sharply lower again this week. The 30 Year T-Bond broke to the downside from a 5-week flag pattern which would project targets around the 130 level. The trend remains down across the sector for US markets and only the UK Long Gilts. Gilts were also sharply lower this week having failed to break upside resistance.

Good trading

Phil Seaton

LS Trader