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.
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.
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.
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.