Stocks had a mixed week but ended the week higher. The long-term trend remains up with new all-time highs within range.
The Nikkei 225 completed a trend change to up this week, leaving the Dax as the only one of the four indices we trade in a long-term downtrend. However, a change of long-term trend to up and a breakout to new highs is within range for the Dax.
Palladium rallied to hit new all-time highs again this week. Palladium, along with Gold and Silver remain in long-term uptrends. Copper, the weakest of the four, is still in a long-term downtrend.
The Dollar has seen weakness this week. The Dollar Index broke support, and the Euro rallied above resistance.
The big move came from the British Pound. In recent weeks we have written about the huge net long position on the COT report of commercial traders. This week the Pound rallied 2.47%, with nearly all of that gain coming on Thursday and Friday.
Interest rate futures
Interest rate futures were unable to continue the rally from the prior week as resistance held firm. Four out of five days this week showed heavy selling. This has taken the RSI back to testing bull market support at the 40 level. The long-term trend remains up, but further short-term weakness may be seen and possibly a test of the September lows.
The S&P 500 ended the week lower for the third straight week. However, the lows were sharply rejected, and a huge buying tail is evident on the weekly charts. The long-term trend remains up, with new highs within range. Similar price action is evident on the Nasdaq 100 and Nikkei 225, with the Dax being the weakest of the four indices.
Gold dropped below the key level last week, completing a potential head and shoulders top, but reversed sharply, closing back above the neckline. A further rally above the right shoulder would give a failed pattern and suggest new highs may follow. The long-term trend remains up.
From last week: “There are some possible bullish factors for the Euro, which may lead to a bounce in addition to sentiment, and these are momentum divergence between price and RSI, and heightened volatility.” The Euro dropped to new lows on Tuesday but then put in a sharp rally through the rest of the week. The Dollar Index made the inverse move. However, the long-term trend continues to favour the dollar.
Interest rate futures
From last week: “The RSI is now back to testing the 60 level having held at bull market support at the 40 level at the September the 13th lows. A decisive move above 60 on the RSI would suggest further strength towards recent highs.”
Interest rate futures saw the RSI exceed the 60 level and price rally to test the recent highs as expected. Friday saw a spinning top indecision candle print on the 5-year note following a test almost to the tick of the recent high. A successful breakout could be seen this week.