Weekly Update – 30 June 2019 – LS Trader

Stocks

Stocks ended the week lower, but the long-term uptrend remains intact for all the stock indices we trade at LS Trader, except for the Nikkei.

The S&P 500 is leading the way to the upside but failed to clear the prior week’s high and is grappling with a clear resistance zone. A decisive breakout above this resistance would be bullish.

The Dax and Nasdaq 100 are both within range of upside breakouts to resume their respective uptrends. The Nikkei remains rangebound.

Commodities

From last week on Gold: “However, the rise has been parabolic this past week, and bullish sentiment is extremely high. It could be that we will see some weakness this week, back towards the 1360 level, before the rally continues.” Gold continued the parabolic rally early this week, before peaking at 1442.9 and reversing sharply back to 1400. Sentiment is a little lower but still elevated. The long-term trend remains up, with the market above support, but further correction could be seen before we see 1442.9 exceeded.

Currencies

From last week: “The Dollar Index broke medium-term support and a trendline that has been in place since September 2018. This may lead to further dollar weakness. “ The Dollar Index ended the week lower but has spent most of the week consolidating the prior week’s declines. We may see some strength for another test of the underside of the trend line before prices move lower. For now, the long-term uptrend remains intact, but critical support could be tested this week.

Interest rate futures

Interest rate futures are consolidating near their recent highs. However, there has been a bearish divergence between price and RSI, as mentioned last week, as well as volatility contraction, and declining volume. The trend remains up, but weakness towards a test of support looks likely.

Weekly Update – 23 June 2019 – LS Trader

From last week: “The current global macro picture is aligned with current market trends, which suggests stocks, Gold and interest rates will continue to move higher. However, the Dollar could breakout to the upside this week, which conflicts with that view.” The macro picture discussed last week continues to play out, and the one part that was not in line, namely the Dollar, appears to have started to fall into line this week.

Stocks

The S&P 500 printed a new all-time high on Friday, but reversed lower, closing below the prior resistance level. Whether we see some additional corrective weakness this week remains to be seen, but the trend is up, and new highs are not characteristics that we see in downtrends.

The Nasdaq 100 lags the S&P 500 but also remains in a long-term uptrend. The Dax is close to a breakout this week above the May high. The Nikkei continues to lag and remains in a long-term downtrend, the only one of the four indices that we trade at LS Trader which is in a downtrend.

Commodities

Gold exploded higher, and the longer-term targets that we mentioned in last week’s update remain the focus. However, the rise has been parabolic this past week, and bullish sentiment is extremely high. It could be that we will see some weakness this week, back towards the 1360 level, before the rally continues.

Currencies

The Dollar began the week with strength but reversed sharply in the middle of the week. The Dollar Index broke medium-term support and a trendline that has been in place since September 2018. This may lead to further dollar weakness. The Dollar is already in a long-term downtrend against the Swiss franc and Japanese Yen.

Interest rate futures

Interest rate futures made new highs for the current move this week, and the long-term trend remains up. However, there is divergence between price and RSI, and there has been some short-term bearish price action.

Weekly Update – 16 June 2019 – LS Trader

The current global macro picture is aligned with current market trends, which suggests stocks, Gold and interest rates will continue to move higher. However, the dollar could breakout to the upside this week, which conflicts with that view. As ever, the markets will go where they are going to go, so we follow along for the ride.

Stocks

Stocks closed the week higher than the prior Friday’s close, but flat to slightly down from Monday’s open, which had gapped higher. The trend remains up for all four stock indices that we trade at LS Trader except for the Nikkei, which remains in a downtrend, trading just below short-term resistance.

Commodities

From last week: “Gold put in a strong rally this week and broke through resistance, and now looks set to test the February high. Gold has been in a sideways range for six years and continues to build what could be a massive head and shoulders bottom. If the market can get above the 1400 level, we could see a rally back towards the all-time high at 1923.7 printed back in 2011.”

Gold rallied further this week, in spite of dollar strength. However, Friday’s candle was ugly, as the market tested and rejected the February high. This may indicate some short-term weakness this week, but the trend remains up, and the market is well above support.

Currencies

The dollar reversed this week, with the Dollar Index finding support from above the prior week’s low. Wednesday and Friday had strong buying days, accompanied by heavy volume, which suggests further strength this week. Several major currencies are set to test critical levels this week, and if dollar strength continues, we could see multiple breakouts and a resumption of dollar strength.

Interest rate futures

Interest rate futures have had a mixed week. The long-term trend remains up across the sector, but there has been some short-term weakness in some markets. The shorter-term futures remain the strongest, and these either tested or made new highs for the current move this week.

Weekly Update – 9 June 2019 – LS Trader

Stocks

Stocks put in a strong rally this week. The long-term trend remains up for US and European indices. Of the four indices that we trade at LS Trader, only the Nikkei is in a long-term downtrend.

However, in spite of the long-term trend being up for US stocks, the RSI remains in the bear range. This week’s strong 5-day rally has not been sufficient to take the RSI back up to 60. This week’s rally has retraced between 50 and 61.8% of the decline from the April peak on the Nasdaq 100 but has exceeded the 61.8% retracement on the S&P 500, which remains the stronger of the two. If either market retraces more than 78.6% of the prior decline, we will likely see the April peak exceeded and the uptrend resume.

Commodities

From last week: “Gold is potentially decoupling from the dollar as both are rallying together. Similarly, the rally in Gold is in the opposite direction to Copper, which could complete a change of long-term trend to down this week. Silver remains in a long-term downtrend but may test resistance this week.”

Gold put in a strong rally this week and broke through resistance, and now looks set to test the February high. Gold has been in a sideways range for six years and continues to build what could be a massive head and shoulders bottom. If the market can get above the 1400 level, we could see a rally back towards the all-time high at 1923.7 printed back in 2011.

Currencies

The dollar has seen further short-term weakness this week. The long-term trend continues to favour the dollar against all of the majors except the Japanese Yen. With the Dollar Index declining this week, a new low RSI print at 35 broke bull market support, with the lowest RSI reading since February 2018.

Interest rate futures

Interest rate futures continue to rally. The 5&10 year T-Notes and the UK Long Gilts all made new highs for the current move. The long-term trend remains up across the sector.

Weekly Update – 2 June 2019 – LS Trader

Stocks

From last week: “The Nikkei found support just above a critical shelf of support which could be tested this week. If support here is broken, there is substantial room for further weakness, possibly back to the December low.” The Nikkei broke support as expected with a big down day on Friday.

Weakness is evident throughout the global stock markets. The S&P 500 broke the next level of support, and the 40 level on the RSI, but remains in a long-term uptrend. It’s the same story for the Nasdaq 100 and the Dax.

Commodities

The metals markets are becoming interesting. Gold is potentially decoupling from the dollar as both are rallying together. Similarly, the rally in Gold is in the opposite direction to Copper, which could complete a change of long-term trend to down this week. Silver remains in a long-term downtrend but may test resistance this week.

Currencies

The currencies have seen mixed trading this week with the dollar index rallying to test the local top before reversing, printing an evening star reversal pattern on the daily chart. This could lead to a test of support in the week ahead. However, the long-term trend continues to favour the dollar against most of the majors.

The dollar declined sharply against the Japanese Yen on Friday as the long-term downtrend resumed on heavy volume.

Interest rate futures

From last week: “As we have been writing for months, the trend globally is towards lower interest rates, not higher. US interest rate futures posted their highest levels in 18 months this past week. UK Long Gilts made their highest print since October 2016 as events of the past week drastically increase the changes of Brexit happening.”

Our comments in last week’s update, which follow on from what we have been writing for months, were right on target as interest rate futures continue to rally, as yields fall. The fed funds rate is now pricing in two rate cuts this year, which is the opposite to what the Fed has been saying for quite a while. Look for interest rate cuts in the US before the end of the year.