Weekly Update – 31 May 2020 – LS Trader

Stocks

The Nasdaq 100, which is the strongest of the stock indices, began the week with continued strength again, moved lower and then pushed back higher to close near the highs for the week, and, within range of a breakout to new all-time highs. Volatility continues to contract and is now at the lowest level since early February.

Commodities

Gold began the week with weakness and pushed down to an intraday low below the lower boundary of the triangle, but then reversed higher, with a strong buying tail, and printing a hammer pattern. The long-term trend remains up.

Currencies

The Dollar Index is at a very critical make or break juncture. Tuesday and Thursday saw big down days, the triangle broken and a break of horizontal support, only to see buyers return and form a hammer, and closing back at the prior support level. If we see price move above Friday’s high, we may see further rally as that would suggest the bulls had defended the lows. If last week’s low is taken out, we may see a cascade of selling, potentially down to the March low, which is the next structural level of support.

Interest rate futures

From last week: “The long-term uptrend remains intact for the shorter-term interest rate futures markets. Both the 10 Year T-Note and 30 Year T-Bond continue to coil just below resistance and could breakout to the upside.” Volatility continues to contract in the interest rate futures markets as price continues to coil. The eventual breakout from this range could be substantial, and it could be to the upside or the downside. The technical and trend structure before the consolidation into the random 2-way rotational environment still supports upside resolution.

Weekly Update – 24 May 2020 – LS Trader

Monday is a Bank Holiday in the UK and is Memorial Day in the US, so the week ahead will be a shortened trading week.

Stocks

Despite the recent rally, the long-term trend remains down for all stock indices. The Nasdaq 100 remains by far the strongest index and may well test and possibly exceed the February all-time high.

However, the other global indexes are weaker and are struggling to make any upside progress, finding resistance around the 61.8% retracement levels of the prior decline.

Commodities

Gold made a new high for the week but remains below the April high. Silver continued the rally that began last week but turned lower on Thursday. The long-term trend remains down.

The energy markets have continued their recent corrective rally, which appears as though it may be running out of steam at a critical resistance area.

Currencies

The Dollar continues to consolidate against the majors. So far, the Dollar has only completed a breakout against the British Pound, but multiple breakouts are within range for a resumption of the long-term dollar bull trend.

Interest rate futures

Interest rate futures continue to consolidate in a very tight range just below the highs of the year, in the case of the shorter-term markets. The 10-year T-Note, and the weakest in the sector, the 30-year t-bond continue to trade in rectangles. An upside breakout in these two markets would likely lead to a test of the March high. Volatility has gone from an extreme high in March, to the current low levels, which are also low by historical standards.

Weekly Update – 16 May 2020 – LS Trader

Stocks

The Nasdaq 100, which is the strongest of the stock indices, began the week with continued strength but then gave up the gains and ended the week lower. The general stock market has made no upside progress for a month and could be on the verge of rolling over. Despite the recent rally, the long-term trend remains down for all stock indices.

Commodities

From last week: “Gold has held above support and continues to trade sideways in a triangle. The triangle has a slight upward bias in terms of the expected breakout being in the direction of the primary trend, which is up.” Gold broke out through the upside of the triangle in line with the primary trend and will now likely test and exceed the recent high at 1788.

Currencies

The Dollar has had a good week, gaining against most of the majors. The Dollar Index is testing the upper boundary of a triangle and may break to the upside. EUR/USD is naturally the inverse pattern, so we could see a downside breakout for the Euro.

The British Pound already broke to the downside from a similar price congestion area, and now has little in the way from a technical standpoint to protect against a test of the recent low.

Interest rate futures

From last week: “Interest rate futures have continued to trade mostly sideways, with a slight upward bias, especially in the shorter-term markets. The 3-Month Eurodollar broke out to a new high but was unable to hold that high into the close.” The long-term uptrend remains intact for the shorter-term interest rate futures markets. Both the 10 Year T-Note and 30 Year T-Bond continue to coil just below resistance and could breakout to the upside.

Weekly Update – 10 May 2020 – LS Trader

Stocks

The S&P ended the week higher but remains below the recent high, which is a clear resistance level. In addition, volatility continues to contract, as does volume. The RSI, despite the massive rally, has been unable to clear the 60 level and remains in the bear range. The long-term trend remains down.

The Nasdaq 100 has been stronger and did exceed its prior high. However, the same technical weakness is also evident here, except for the RSI, which has moved above 60. New all-time highs are a possibility.

Commodities

Gold has held above support and continues to trade sideways in a triangle. The triangle has a slight upward bias in terms of the expected breakout being in the direction of the primary trend, which is up.

The energy markets continue their recovery but remain in a long-term downtrend.

Currencies

The Japanese Yen was the first to break out, but as yet without follow-through. The Dollar remains within range of breakouts against multiple majors.

Interest rate futures

From last week: “Interest rate futures have failed to move higher and break the neckline, as volatility continues to contract. This is a choppy consolidation that could still resolve either way, with a slight upward bias in the direction of the primary trend.” Interest rate futures have continued to trade mostly sideways, with a slight upward bias, especially in the shorter-term markets. The 3-Month Eurodollar broke out to a new high but was unable to hold that high into the close.

Weekly Update – 3 May 2020 – LS Trader

Stocks

The S&P continued to rally higher, slightly exceeding the 61.8% retracement of the prior decline until Thursday before turning lower. Friday gapped lower and closed lower again. It is possible that will be the end of the corrective rally and that prices may resume the downtrend.

The Nasdaq 100 had been stronger still, testing the 78.6% retracement of the prior decline. As we have mentioned several times over the years, when the 78.6% retracement level is exceeded, the market will often go on to at least test the prior high. However, the current global backdrop and the price action seen on Thursday and Friday continue to keep that view as a low probability in this case.

Commodities

Commodities continue to consolidate and digest the recent moves. The energy markets are trying to scrape themselves off the bottom but remain in long-term downtrends, as they will for the foreseeable future.

Metals have seen continued weakness. Gold has traded lower but for now, is holding above support.

Currencies

The Dollar has seen continued weakness this past week, and we remain flat all currencies. A few majors are within range of breakouts.

Interest rate futures

From last week: “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.”

Interest rate futures have failed to move higher and break the neckline, as volatility continues to contract. This is a choppy consolidation that could still resolve either way, with a slight upward bias in the direction of the primary trend.