Weekly Update – 26 April 2020 – LS Trader

Stocks

From last week on the Nasdaq 100: “Friday’s bar turned lower, and that may be the end of the rally.” Stocks opened the week lower but did regain some of the declines with a strong day on Friday, but still closed down for the week.

Commodities

The energy markets had the wildest of weeks with May Crude Oil declining to -$40.32 before recovering. However, although weakness was also seen in June, which made a low print of $6.50, it never made the extreme move that May did. It is normal to roll out of the expiring contract around a week before expiry, and those that stayed in May got caught out. Therefore, the price action in June is more important as it was the liquid contract at the time. Nonetheless, one would never think that such prices levels would be seen in Crude. Whether we have a similar situation when June expires next month remains to be seen.

The trend remains down in the Crude markets. Still, there is very little value in a short position due to the extreme volatility; the required position sizing makes it all but impossible to structure a short trade with asymmetric risk-reward from current levels.

Gold dipped on Tuesday but recovered and rallied back towards the recent highs, keeping the uptrend intact.

Currencies

The dollar remains in the middle of the recent range but is still in an uptrend against the majors. We are currently flat all currency markets, which is a situation that does not arise that often.

Interest rate futures

From last week: “There are arguable head and shoulders continuation patterns forming on the 30 Year T-Bond and 10 Year T-Notes. A break of the neckline would suggest new highs and possibly negative interest rates in the US.”

Interest rate futures continue to trade in the vicinity of the neckline and could yet break to new highs. The trend remains up across the sector.

Weekly Update – 19 April 2020 – LS Trader

Stocks

From last week: “Markets could continue to rally further, and the adage of don’t fight the Fed is often prudent.” Stocks continued their recent corrective rally. Strength has been impressive, certainly in the Nasdaq 100, which has easily exceeded the 61.8% retracement level from the all-time high, falling just short of the 78.6% retracement level.

Friday’s bar turned lower, and that may be the end of the rally. However, history tells us that when 78.6% retracement levels are exceeded, markets tend to complete the retracement and go on to make new highs. That would have seemed inconceivable a few weeks ago, and it still seems unlikely, but possible.

Commodities

Gold reached new seven-year highs on Tuesday but ended the week lower. The long-term trend remains up. Silver continues to correct, and the correlation between silver and several other markets, including the commodity-based currencies, is evident. If stocks do resume the downtrend, other correlated instruments will follow.

Currencies

The dollar remains in the middle of the recent range but is still in an uptrend against the majors. As above, the commodity-based currencies remain weak, and a resumption of the downtrend is within range.

Interest rate futures

From last week: “There are arguable head and shoulders continuation patterns forming on the 30 Year T-Bond and 10 Year T-Notes. A break of the neckline would suggest new highs and possibly negative interest rates in the US.”

Interest rate futures tested the neckline but have so far been unable to break above resistance. The trend remains up for the sector, which the 5-year T-Notes and 3 Month Eurodollars remain strong.

Weekly Update – 12 April 2020 – LS Trader

Monday is a Bank Holiday in the UK, but US markets will be open as normal.

Volatility continues to undergo compression in most markets as it declines from the recent peak, which shows that markets are correcting against the primary trend. We can expect the resumption of most trends over the coming weeks.

Stocks

Stocks have retraced to the 50% range and have met the minimum requirements for a retracement. Indices could turn down as early as this week. However, markets are now back within the middle of the range and with the Fed throwing the kitchen sink at them, confirmation that the downtrend has resumed is required. Markets could continue to rally further, and the old adage of don’t fight the Fed is often prudent.

Commodities

Gold made an explosive move to the upside, taking out the prior highs as expected, and reaching its highest level in over seven years. Silver also rallied, bringing an end to a profitable downtrend.

Commodities overall have seen mixed trading with strength in some markets and weakness in others.

Currencies

The dollar moved lower this week against the majors, and the Dollar Index ended the week lower, back in the middle of the current range.

Interest rate futures

The trend remains up for interest rate futures, with the shorter-term markets still holidng above support. There are arguable head and shoulders continuation patterns forming on the 30 Year T-Bond and 10 Year T-Notes. A break of the neckline would suggest new highs and possibly negative interest rates in the US.

Weekly Update – 4 April 2020 – LS Trader

Volatility has been at unprecedented levels in many markets in recent weeks. Volatility remains high in most markets but is undergoing compression in most markets as it declines from the recent peak. This suggests that markets that are undergoing volatility compression are correcting against the primary trend. Therefore, we can expect the resumption of most trends over the coming weeks.

Stocks 

Stocks continue to find resistance around the 38.2% retracement level of the decline from the all-time high. The rally from the lows last month are counter-trend and corrective, but the corrections may not be completed yet. The trend structure appears to be incomplete to the downside, so new lows, perhaps to much lower levels, remain a possibility.

Commodities

From last week “The energy markets appear to be trying to bottom. RBOB Gasoline leads the way to the upside, and we exited our short position this week, for the biggest winning trade of the year to date.”

The energy markets continued their rally from the prior week, with massive upside moves being seen on Thursday and Friday. We exited two more highly profitable short trades on Brent and Light Crude. The long-term trend remain down but it’s looking increasingly probable that the lows are in for the foreseeable future.

Currencies

The Dollar Index found support at the prior week’s lows and rallied for most of the week, keeping the dollar uptrend intact. In spite of the weakness seen during the preceding week, the dollar remains strong against the majors and is in current uptrends against the Canadian Dollar and the British Pound.

Interest rate futures

Interest rate futures remain in long-term uptrends, with the shorter-term markets remaining stronger than the 30 Year T-Bond. The trend remains up across the sector, and we may yet see new highs.