Weekly Update – 23 June 2019 – LS Trader

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.

Stocks

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.

Commodities

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.

Currencies

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.

Weekly Update – 16 June 2019 – LS Trader

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. As ever, the markets will go where they are going to go, so we follow along for the ride.

Stocks

Stocks closed the week higher than the prior Friday’s close, but flat to slightly down from Monday’s open, which had gapped higher. The trend remains up for all four stock indices that we trade at LS Trader except for the Nikkei, which remains in a downtrend, trading just below short-term resistance.

Commodities

From last week: “Gold put in a strong rally this week and broke through resistance, and now looks set to test the February high. Gold has been in a sideways range for six years and continues to build what could be a massive head and shoulders bottom. If the market can get above the 1400 level, we could see a rally back towards the all-time high at 1923.7 printed back in 2011.”

Gold rallied further this week, in spite of dollar strength. However, Friday’s candle was ugly, as the market tested and rejected the February high. This may indicate some short-term weakness this week, but the trend remains up, and the market is well above support.

Currencies

The dollar reversed this week, with the Dollar Index finding support from above the prior week’s low. Wednesday and Friday had strong buying days, accompanied by heavy volume, which suggests further strength this week. Several major currencies are set to test critical levels this week, and if dollar strength continues, we could see multiple breakouts and a resumption of dollar strength.

Interest rate futures

Interest rate futures have had a mixed week. The long-term trend remains up across the sector, but there has been some short-term weakness in some markets. The shorter-term futures remain the strongest, and these either tested or made new highs for the current move this week.

Weekly Update – 9 June 2019 – LS Trader

Stocks

Stocks put in a strong rally this week. The long-term trend remains up for US and European indices. Of the four indices that we trade at LS Trader, only the Nikkei is in a long-term downtrend.

However, in spite of the long-term trend being up for US stocks, the RSI remains in the bear range. This week’s strong 5-day rally has not been sufficient to take the RSI back up to 60. This week’s rally has retraced between 50 and 61.8% of the decline from the April peak on the Nasdaq 100 but has exceeded the 61.8% retracement on the S&P 500, which remains the stronger of the two. If either market retraces more than 78.6% of the prior decline, we will likely see the April peak exceeded and the uptrend resume.

Commodities

From last week: “Gold is potentially decoupling from the dollar as both are rallying together. Similarly, the rally in Gold is in the opposite direction to Copper, which could complete a change of long-term trend to down this week. Silver remains in a long-term downtrend but may test resistance this week.”

Gold put in a strong rally this week and broke through resistance, and now looks set to test the February high. Gold has been in a sideways range for six years and continues to build what could be a massive head and shoulders bottom. If the market can get above the 1400 level, we could see a rally back towards the all-time high at 1923.7 printed back in 2011.

Currencies

The dollar has seen further short-term weakness this week. The long-term trend continues to favour the dollar against all of the majors except the Japanese Yen. With the Dollar Index declining this week, a new low RSI print at 35 broke bull market support, with the lowest RSI reading since February 2018.

Interest rate futures

Interest rate futures continue to rally. The 5&10 year T-Notes and the UK Long Gilts all made new highs for the current move. The long-term trend remains up across the sector.

Weekly Update – 2 June 2019 – LS Trader

Stocks

From last week: “The Nikkei found support just above a critical shelf of support which could be tested this week. If support here is broken, there is substantial room for further weakness, possibly back to the December low.” The Nikkei broke support as expected with a big down day on Friday.

Weakness is evident throughout the global stock markets. The S&P 500 broke the next level of support, and the 40 level on the RSI, but remains in a long-term uptrend. It’s the same story for the Nasdaq 100 and the Dax.

Commodities

The metals markets are becoming interesting. Gold is potentially decoupling from the dollar as both are rallying together. Similarly, the rally in Gold is in the opposite direction to Copper, which could complete a change of long-term trend to down this week. Silver remains in a long-term downtrend but may test resistance this week.

Currencies

The currencies have seen mixed trading this week with the dollar index rallying to test the local top before reversing, printing an evening star reversal pattern on the daily chart. This could lead to a test of support in the week ahead. However, the long-term trend continues to favour the dollar against most of the majors.

The dollar declined sharply against the Japanese Yen on Friday as the long-term downtrend resumed on heavy volume.

Interest rate futures

From last week: “As we have been writing for months, the trend globally is towards lower interest rates, not higher. US interest rate futures posted their highest levels in 18 months this past week. UK Long Gilts made their highest print since October 2016 as events of the past week drastically increase the changes of Brexit happening.”

Our comments in last week’s update, which follow on from what we have been writing for months, were right on target as interest rate futures continue to rally, as yields fall. The fed funds rate is now pricing in two rate cuts this year, which is the opposite to what the Fed has been saying for quite a while. Look for interest rate cuts in the US before the end of the year.

Weekly Update – 26 May 2019 – LS Trader

Monday is a Bank Holiday in the UK and is Memorial Day in the US. Therefore, most markets will be closed.

Stocks

The stock markets ended the week lower, but all remain in long-term uptrends except for the Nikkei, which was unable to complete a change of trend. The Nikkei found support just above a critical shelf of support which could be tested this week. If support here is broken, there is substantial room for further weakness, possibly back to the December low.

Commodities

From last week: “However, the long-term trend remains down, with Soybeans and Soybean Oil still in current downtrends and below resistance.” Soybean Oil and Soybeans remain weak and below resistance. However, Rough Rice completed a change of trend to up, and Oats also broke out to the upside. Corn may follow this week.

The energy markets got crushed this week, but remain in long-term uptrend expect for Natural Gas. Metals also remain weak, with Silver already in a downtrend and Gold could follow with weakness this week.

Currencies

The currency markets have seen mixed trading as the Dollar Index rallied to a new high for the current move, its highest print since May 2017. The index was unable to hold those levels and dropped back into the range, and may test support this week. The trend continues to favour the dollar against most of the majors, and if strength returns this week, further breakouts are within range.

Interest rate futures

From last week: “The 3 Month Eurodollar, basis the March 2020 contract, rallied to a new high for the current move. The remaining markets in the sector may test their March highs this week. The trend for interest rates, which move inversely to prices, remains down.” Interest rate futures rallied as expected, with all markets in the sector that we trade at LS Trader breaking out to new highs for the current move.

As we have been writing for months, the trend globally is towards lower interest rates, not higher. US interest rate futures posted their highest levels in 18 months this past week. UK Long Gilts made their highest print since October 2016 as events of the past week drastically increase the changes of Brexit happening.

Weekly Update – 19 May 2019 – LS Trader

Stocks

Stocks had a mixed week after a weak opening on Monday before a recovery during the middle of the week, which still resulted in a down week. The RSI on the daily S&P 500 dropped below the 40 level but only for a day. However, that breach of 40 was enough to have the RSI in a bear range. The long-term trend remains up.

Commodities

From last week: “Silver is the most likely to complete a change of trend to down shortly.” Silver broke support as expected, and completed a change of long-term trend to down, making its lowest print since December. The RSI remains in the bear range, as it has since March.

The grains markets may have bottomed this week as aggressive buying was seen shortly after the open. However, the long-term trend remains down, with Soybeans and Soybean Oil still in current downtrends and below resistance.

Currencies

It’s been a bullish week for the Dollar, which has advanced against most of the majors. The Dollar Index may test the late April high this coming week. The RSI crossed back above the 60 level this week.

The British Pound had a large head and shoulders bottom forming on the daily chart, but that pattern did not complete. Instead, the right shoulder has formed a head and shoulders top, and the neckline was violated. This indicates further weakness towards the January low and a possible change of long-term trend to down in the coming weeks.

The EUR/USD effect, which we have written about many times, stating that January tends to set the high or low for the year, continues to suggest that the Euro peaked at 1.1718 basis the back-adjusted continuous contract, back on January the 10th, and that the Euro will trade below that level (Dollar bullish) for the remainder of 2019.

Interest rate futures

From last week: “Interest rate futures continue to show signs of strength as the long-term uptrend appears to be getting back underway. The March high could be tested in the coming weeks.” Interest rate futures continued to rally this week. The 3 Month Eurodollar, basis the March 2020 contract, rallied to a new high for the current move. The remaining markets in the sector may test their March highs this week. The trend for interest rates, which move inversely to prices, remains down.

Weekly Update – 12 May 2019 – LS Trader

Stocks

From last week: “..the continued collapse in volatility does put a question mark against much further rally.” Both the Nasdaq 100 and the S&P 500 failed to make new highs this week and sold off aggressively. However, the daily chart shows long bull shadows on the daily bars, especially on Thursday and Friday, which suggests that the lows are being rejected and that buyers are stepping back in. Added to that, the RSI found support in the 40-50 range, and the long-term trend remains up.

From last week: “The Nikkei tested resistance and only needs to exceed last week’s high to complete a trend change to up to join the other three stock indices that we trade at LS Trader in long-term uptrends.” The Nikkei opened the week lower and, therefore, never completed the trend change and remains in a long-term downtrend.

Commodities

The metals markets remain in long-term uptrends overall, but price action continues to remain sloppy and without short-term directional bias. Silver is the most likely to complete a change of trend to down shortly.

The energy markets may have made a significant top in late April. Short-term price action suggests lower prices in the coming weeks. However, for now, the long-term trend remains up.

The grains markets remain weak, with most of the sector in extended downtrends. Soybeans printed its lowest price since late 2008; such is the extent of current price weakness. Soybean Oil may test the 25.70 level in the coming week or so, which is the lowest print since 2006.

Currencies

Price action remains mixed in the currency markets but continues to favour the dollar overall. The Aussie made its lowest print since January, and the Kiwi its lowest since October, but the Dollar Index corrected lower.

Interest rate futures

Interest rate futures continue to show signs of strength as the long-term uptrend appears to be getting back underway. The March high could be tested in the coming weeks.

Weekly Update – 5 May 2019 – LS Trader

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

## Stocks
The S&P 500 printed a new all-time high this week but reversed sharply on the same day, before recovering most of those declines on Friday. The trend remains up, and new highs look likely. Similar price action was seen in the Nasdaq 100. The RSI remains in the bull range. However, the continued collapse in volatility does put a question mark against much further rally.

From last week: “The Nikkei tested resistance this past week but stands a good chance of a breakout this week ahead.” The Nikkei tested resistance and only needs to exceed last week’s high to complete a trend change to up to join the other three stock indices that we trade at LS Trader in long-term uptrends.

## Commodities
The energy markets saw further weakness this week but remain in long-term uptrends, except for Natural Gas.

The long-term trend remains up for metals, but they all are showing corrective price action at present with no directional bias.

The grains sector remains weak with all markets except for Oats in long-term downtrends.

## Currencies
The currency markets remain mixed, but with the long-term trend still favouring the Dollar against most of the majors.

The long-term trend for the British Pound remains up, and it’s possible that the recent correction is at an end and that a right shoulder low of a head and shoulders bottom formation has been completed. It is premature to front-run head and shoulders patterns and waiting for a breakout above the neckline is standard procedure. The RSI is testing 60 again having just about held the 40 support level during the last week of April.

## Interest rate futures
Interest rate futures continue to trade in a choppy, sideways mess in the short-term, but remain in long-term uptrends. The only market in the sector within range of a change of long-term trend to down is the UK Long Gilt.

Weekly Update – 28 April 2019 – LS Trader

Stocks

From last week: “This suggests that there is still potentially further to go in this rally.” Stocks rallied again with the Nasdaq 100 reaching new all-time highs. The S&P 500 fell just short of new all-time highs basis the back-adjusted continuous contract but may post new highs this week. The Dax has rallied to its highest level since September last year.

Also from last week: “As before, only the Nikkei remains in a long-term downtrend of the four stock indices we trade at LS Trader and could complete a trend change this week.” The Nikkei tested resistance this past week but stands a good chance of a breakout this week ahead.

Commodities

The energy markets made new highs this week but then reversed sharply, with a big down day on Friday breaking short-term support. That brings an end to the uptrend, at least for the short-term, but the long-term trend remains up. RBOB Gasoline, which was the first to breakout, making its move 1-2 weeks before the other markets in the sector, and therefore being the leader, remains above support with the trend intact.

Currencies

The Dollar Index rallied to new highs for the current move and also advanced against most of the majors, pushing the Euro to a new low for the year. The EUR/USD effect remains intact, with January’s high well above current levels, suggesting that was the high of the year.

Interest rate futures

From last week: “It’s possible that a short-term low may have been printed on Thursday as the RSI bounced off the 40 level, keeping these markets in the bull range. In addition, price action saw a 3-day morning star bullish reversal printed. The trend remains up.” Price action this week suggests that what we wrote last week may be correct and that the uptrend is underway again

Weekly Update – 20 April 2019 – LS Trader

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

## Stocks
Stock indices hit new highs for the current move. The RSI on a weekly level has cleared the 60 level on both the S&P 500 and the Nasdaq 100 and is testing it on the Dax. This suggests that there is still potentially further to go in this rally. As before, only the Nikkei remains in a long-term downtrend of the four stock indices we trade at LS Trader and could complete a trend change this week.

## Commodities
From last week: “Crude broke through resistance as expected, completing a change of long-term trend to up. Both Brent Crude and Heating Oil are within range of similar tests and may also breakout and complete long-term trend changes.”

Both Brent Crude and Heating Oil made breakouts and completed the trend change to up. Natural Gas, the only energy market in a downtrend, broke to the downside.

Also from last week: “Gold and Silver continue to show weakness. There is a potential head and shoulders top formation in Gold, and a break of the neckline may lead to continued weakness towards 1222, very near to trend-defining support.” Gold fell through the neckline and may now head lower towards 1222, but for now, the long-term trend remains up.

## Currencies
From last week: “Across the sector, there is an environment of collapsing volatility, and very low volatility levels are evident in several majors, which usually precedes a directional move.” The Dollar Index rallied sharply on Thursday to exceed the March peak and move to its highest level of the current move. The Euro remained below support and moved sharply lower on Thursday, moving inversely to the Dollar Index. The Dollar also broke to the upside against the Swiss franc.

## Interest rate futures
From last week: “The long-term trend remains up across the sector, but further short-term weakness looks likely before the trend reverses back to the upside.” It’s possible that a short-term low may have been printed on Thursday as the RSI bounced off the 40 level, keeping these markets in the bull range. In addition, price action saw a 3-day morning star bullish reversal printed. The trend remains up.