Weekly Update – 27 June 2020 – LS Trader

Stocks

The Nasdaq 100 broke out to new all-time highs on Tuesday but has been unable to hold on to those gains and has pulled back towards the prior February highs. The February highs, which previously acted as resistance, may now provide support. Weakness below that support level will indicate probable further declines.

The S&P 500 and other global stock indices continue to lag the Nasdaq 100, and they remain in long-term downtrends. Downside breakouts to resume the long-term downtrend are within range.

Commodities

Gold exceeded resistance at 1789 but so far without follow through. The long-term uptrend remains intact, and we may see further rally if the market can clear 1800.

Crude Oil tested the 50% retracement level of the decline from January to the April low and has been unable to make progress. The area above current prices includes the large gap down on the 9th March, which remains unfilled and is likely to provide further resistance if we get an additional rally. Despite the rally in the energy markets, the long-term trend remains down across the board.

Currencies

The currency markets remain mixed, with the long-term trend still up for the Dollar index, but down for the dollar against the Australian dollar, Japanese Yen, and Swiss Franc. There are some currency breakouts in range this week.

Interest rate futures

Interest rate futures have rallied up to the top of their ranges and look set to test resistance at the upper boundary of the rectangles that have been in place since March. With the current low levels of volatility and the length of the consolidation, any breakouts have potential to yield decent-sized moves.

Weekly Update – 21 June 2020 – LS Trader

Stocks

The Nasdaq 100 continued lower on Monday, breaking short-term support in the process. The market then reversed and moved higher to test the prior all-time high. So far, the market has been unable to break through resistance. The rally this past week has been on declining volume and volatility.

The S&P 500 and other global indexes remain weaker than the Nasdaq 100, leaving a bearish non-confirmation in place. Currently, of the global indexes, only the Nasdaq 100 is in a long-term uptrend.

Commodities

The commodity markets remain quiet as many markets continue to undergo volatility compression. Multiple markets, such as Gold, continue to trade in rangebound consolidations. The pressure is building for the eventual breakouts. Breakouts from consolidations usually go in the direction of the prior trend. In the case of Gold, that suggests an upside breakout.

Currently, the LS Trader system is flat all metals and energy markets. The energy markets continue to recover from their rout earlier in the year. Crude Oil traded at a high of 72.50 on the 8th January, before declining all the way down to the mid-April low at 8.17. (prices as per the back-adjusted continuous contract). This week, Crude reached the 50% retracement level of the decline from the January high on Friday.

Currencies

The long-term trend remains up for the Dollar Index. The index continues to recover from the recent sell-off, which led to a volatility extreme. We may see a test of the 200-day and 50-day moving averages this week.

Interest rate futures

Interest rate futures remain in long-term uptrends but continue to trade within the trading range that has been in place since March.

Weekly Update – 14 June 2020 – LS Trader

Stocks

The Nasdaq 100 continued to make new highs through to Wednesday. Thursday saw a sharp one-day reversal, which took the market back below the change of polarity from the February all-time high. Friday printed a long-legged doji, which is an indecision pattern. Bulls have so far defended the index at fair value. The trend remains up.

Divergence continues between the Nasdaq 100 and S&P 500, which remains well short of its all-time highs printed in February. The S&P 500 also saw weakness this week but remains in a long-term downtrend. For now, the only stock index of the four we trade at LS Trader in a long-term uptrend is the Nasdaq 100.

Commodities

Gold ended the week higher, regaining the 50-day moving average and moving back into the prior range. The long-term trend remains up.

One of the big movers recently has been Rough Rice. Rice had been in a massive bull market, reaching a high of 23.565 before trading limit down for four days, which took the market back below support, bringing the uptrend to an end.

Currencies

Selling in the Dollar Index reached a volatility extreme and buyers returned during the second half of the week, keeping the long-term trend up. The long-term trend continues to favour the dollar against most of the majors.

Interest rate futures

From last week: “The market finally broke out of the range but did so to the downside. However, for now, at least, the long-term trend is up.” Interest rate futures had a good week, retracing almost all of the prior week’s decline. This has taken the sector back above the 50-day MA and into the previous range. The trend remains up.

Weekly Update – 7 June 2020 – LS Trader

Stocks

The Nasdaq 100 broke out to new all-time highs on Friday and is the first of the global stock indices to complete their recovery. Of potential significance is the fact that the Nasdaq closed above prior resistance of the February high, which is also a weekly closing high. Volatility is at a relatively subdued level for an all-time high, so this rally could still have legs. There will be many market participants who have remained on the sidelines since the February decline, who will be looking for a way to get on board. There will be others that want to fade the breakout. This week could be explosive.

Commodities

Gold had a bad week, closing below its 50-day moving average and the low of the hammer pattern printed two weeks ago. Price ended the week at a 2-month low. The trend remains up.

Currencies

From last week on the Dollar Index: “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.” The Dollar did take out the low and moved sharply lower. Price action on Friday could be stopping action, and a move above Friday’s high may lead to a short-term rally. The long-term trend remains up for now.

Interest rate futures

From last week: “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 market finally broke out of the range but did so to the downside. However, for now, at least, the long-term trend is up.