Weekly Update 17th February 2013 – LS Trader

Stocks continue to press higher with the S&P posting new 5 year highs once again and all time highs are still within range. Whether we see all time highs remains to be seen as the daily price action suggests that the markets are rising in agony.

The week ahead will be a shortened trading week due to Presidents’ Day on Monday in the U.S.

Stocks

The S&P 500 ended the week higher by 0.31%, with a new high weekly close for the current move as the market continues to stabilize above 1500. However, the daily price action is far from convincing and is very much a slow grind higher that looks susceptible to weakness at any time. The price range for the week was just 13 points, which is very narrow for this market and is a range that is unlikely to continue.

One factor that is possibly holding U.S. stocks down is the resistance that we mentioned in last week’s update for the Dow at 14000. This past week March Dow rose to 14004 but was unable to hold above 14000, closing the week back at 13948. The Dow 30 is not a market that we trade at LS Trader but it is a market that we monitor, especially around psychological levels, such as round numbers.

Last wee we wrote that we expected that the Nikkei would recover the losses seen during the prior week and that did happen, although once again resistance was found around 11500. The current range spans roughly 500 points between just above 11500 and just above 11000. Watch both levels for a breakout, with a subsequent move in the direction of the breakout likely.

Commodities

The general trend with few exceptions is bearish for commodities. Regular readers will know that our expectation at LS Trader is for a bear market in the grains sector to more than erase the 2012 bull market. This past week has seen price action commensurate with that view as the grains markets have resumed the downward trend. Based on LS Trader’s proprietary trend analysis, the only market from the grains sector in a long term uptrend is rough rice.

Gold this week broke out of its trading range to the downside, giving a confirmed change of trend. This move led to some heavy selling on Friday and we may now see further weakness that will likely drag silver lower for a change of trend as well.

Sugar is also trending nicely lower and is in the classic bear market formation of lower lows and lower highs. Our next downside target is the May 2011 lows at 17.01.

Coffee continues its bear market move, this week falling for a fourth consecutive week. This week’s decline of 2.77% continues a fairly impulsive decline since the failure of the May contract to clear 160. We have downside targets at 135.

Commodity bulls are really only getting any joy at present from the energy sector, particularly brent crude and no leaded gas. Heating oil is also in an uptrend but both U.S crude and natural gas are still in long term downtrends.

Currencies

The dollar index advanced for a second straight week as the dollar gained almost across the board. The long term trends in the currency sector are mixed. This past week saw the end of the euro uptrend, at least for the near term, although the longer term trend is still intact.

The British pound continues to crumble, this week dropping below $1.55 for the first time since July last year. We remain on target for a continuation lower towards $1.5350.

The Japanese yen continues to weaken and this week lost another 0.67% against the dollar, in spite of a bit of a recovery seen in the middle of the week. The long term trend continues to favour the dollar but there are signs that the current trend may be on the verge of taking a bit of a breather. Longer term this market still looks to have further to run. This has so far been a hugely profitable trend for the LS Trader system with already with 1302 spread betting points profit from this single trade alone, and the trade is still running.

Interest rate futures

Interest rate futures were lower across the board but the new long term downtrend is still yet to really get underway and still ideally needs confirmation with some weakness from the shorter term markets. The lows of the current move continue to attract buyers and selling is unlikely to take hold until those levels are taken out.

Good trading

Phil Seaton

LS Trader

LS Trader weekly update 3rd February 2013

As we expected in last week’s LS Trader update, the March S&P 500 crossed the 1500 level to make new 5 year highs once again, as market conditions remain bullish. According to the January stock market barometer, which simply states that as goes January, so goes the rest of the year, suggests that stocks will continue to rise in 2013 and hit new all time highs. Going back to 1950, this barometer has an 88.7% accuracy ratio and has only been significantly wrong on 7 occasions. Read from that what you will. What we can say for certain is that currently stocks are bullish and that the long term trends for stock indices are up.

The long term trends currently are up for stocks, mixed for commodities and mostly down for the dollar. The bond markets saw a change of trend to down for the first time in a long time during the past week.

Stocks

Stock indices continue to soar as once again three of the four stock indices that we trade at LS Trader have gone on to make new multi-year highs once again. These three markets are the S&P 500, Nikkei 225 and the Dax. The laggard continues to be the Nasdaq 100, the only index of the four that is still in a long term downtrend according to our proprietary trend indicators at LS Trader.

The Nasdaq 100 is still grappling with resistance at 2765 and is still a way off last year’s highs. This means that should the markets turnover, the Nasdaq will be the first short candidate and likely the one with the largest downside potential. However, for now the focus will be on the leading indices, in particular the S&P 500 and the question as to whether we will see all time highs in 2013. It’s looking increasingly likely at this stage.

From a spread betting perspective, the Nikkei 225 is currently the most profitable of the indices and is currently showing us a profit of just over 2000 spread betting points since we entered long back on the 21st November at 9270.

January ended with the S&P 500 having its best year since 1997, while two other indices that we don’t trade at LS Trader, the Dow and the FTSE, reached their highest levels since 1994 and 1989 respectively. The latter two indices o not historically trend well and are not profitable for trend following systems such as ours, which is the reason why they do not form a part of the LS Trader master portfolio.

Commodities

The metals markets continue to be mixed, with gold currently the weakest. Copper and Palladium continue to lead the way, followed by silver. Palladium reached its highest level since September 11 this past week. Currently all 4 metals are in a long term uptrend, although gold is perilously close to critical support and a change of major trend to down.

Last week we wrote that strength had been returning to the energy sector and we’ve seen more of that this week with Brent Crude climbing to its highest level since April last year. Heating oil and no leaded gas have also continued to rise, especially the latter, which advanced 5.66%, reaching its highest level since July 2008.

Currencies

The dollar has been lower almost across the board, with the main exceptions being against the British Pound and the Japanese Yen. The dollar index has resumed the long term downtrend this week and fell to just a few ticks above critical major support at 7887. Should this level be breached, we can expect continued weakness for the dollar.

The Euro climbed to its highest level since November 2011 and is now closed to completing the target set by the bull flag at $1.3750.

The yen continues it’s sharp decline and we now have just over 1200 spread betting points of profit from this pair since we entered the trade back on the 15th November. The yen’s decline has been extremely profitable for the LS Trader system, as its weakness has also helped the Japanese stock index to soar higher, bringing in substantial profits from that long trade as well.

Interest rate futures

Major support was tested during the past week on the interest rate sector, with both the 30 year T bond and the 10 year T note breaking support. Perhaps significantly, the 30 year bond closed the week below support and the trend is now down. How far this market can fall remains to be seen.

The shorter term markets are just about holding on to the long term uptrend but that could change in the coming weeks.

Good trading

Phil Seaton

LS Trader

LS Trader System weekly update 27th January 2013

The S&P 500 hit new 5 year highs again during the past week with the cash S&P 500 crossing 1500 for the first time since 2007. The March S&P 500 hit a high of 1499.1 and will very likely clear 1500 during the coming week. All time highs for the S&P 500 are now within range and may be seen in 2013.

The long term trends are therefore still up for stocks, up for bonds (although possibly not for much longer), mixed for the dollar and for commodities.

Stocks

The stock index sector remains bullish with 3 of the 4 indices that we trade at LS Trader reaching new multi year highs during the past week. The S&P 500, having hit new 5 year highs again this week will likely cross 1500 on the March contract on Monday and should the market be able to close above that psychological level, may well continue higher from there. With all time highs being within range over the coming weeks, that will be the focus of traders, who will try to keep pushing the market higher.

The March Nikkei 225 had another volatile week, continuing with the pattern seen during the 2 prior weeks of sharply lower prices early in the week followed by a strong recovery. The weekly charts show long lower shadows on the last 3 weeks’ candles, which indicates a strong rejection of the lows around 10400. Having been sharply lower earlier in the week, the market recovered to hit new highs for the current move on Friday.

The Dax narrowly held on to support and subsequently pushed to new highs for the current move, keeping the long term uptrend intact.

Commodities

The metals markets have been mixed over the past week but continue to be led by Palladium, which advanced 2.53% this week for a third consecutive week of advances. Palladium now stands at its highest level since 2011.

Strength continues to return to the energy sector with both Brent Crude and no leaded gas having good weeks. The trend remains up for most of this sector but is still down for U.S. Crude and Natural gas.

Last week we wrote about Feeder Cattle and suggested that the downtrending market may have a pullback to test the underside of the trendline, and that did happen this week. The market has closed pretty much bang on that level and is therefore at a critical point and could go in either direction. If the resistance level holds, a move lower to 135 may follow in due course.

Grains markets have shown short term counter trend strength during the past couple of weeks but the long term trend still remains down across the sector and the downtrend may resume during the coming weeks once support levels are broken. There is plenty of downside potential in these markets and sharply lower prices are expected in 2013.

Currencies

The dollar has been very mixed, both rising and declining against different major currencies. The Euro climbed to its highest level in 11 months and may now target 13750.

The British Pound completed a long term trend change to down for the first time in quite a while and having broken key support may now continue lower towards $1.53, in what may be a substantial downtrend over the coming months.

The dollar has continued its amazing run higher against the Yen and the LS Trader system has currently caught just over 1000 spread betting points profit from this trade since the system entered long back on the 15th November.

Interest rate futures

Interest rate futures have all seen bearish price action this week and now look set to test critical support during the coming week. Will the much-anticipated collapse for this sector finally be arriving? The position will be clearer depending on how the market reacts when major support is tested, possibly early in the coming week.

Good trading

Phil Seaton

LS Trader

LS Trader Weekly Update 20th January 2013

The S&P 500 hit new 5 year highs during the past week as the bullish stock phase continues. All time highs for the S&P 500 are now within range. Whether the markets can keep the bullish run going remains to be seen, but there is further upside potential. The long term trends are therefore still up for stocks, up for bonds, mostly down for the dollar and remain mixed for commodities.

Monday sees the U.S. markets closed for Martin Luther King Day.

Stocks

The March S&P 500 continued its recent advance and as mentioned about, reached new 5 year highs in the process. The focus now will shift towards all time highs as based on the chart structure, that is where the next real resistance level will appear. On the basis of the cash S&P 500, that represents around another 90 points, to 1575, from Friday’s close.

The March Nikkei 225 also added to gains but had a second consecutive week of volatility, which at times earlier in the week had seen much lower prices, only for the markets to recover. The weekly charts show long lower shadows on the last 2 weeks’ candles, which indicate rejection of the lows around 10400.

The Dax has continued to drift sideways but did have a go at a test of the recent highs but was unable to push through and fell back slightly. The range of the past few weeks has been very tight and volatility is on the decline in this index. That will likely change soon as a break from the range will lead to some larger price moves, in whichever direction the breakout occurs.

Commodities

Palladium did break out of the range as we suggested may happen in last week’s update but has so far been unable to push higher. The trend remains up. Other metals also had good weeks, with decent recoveries from recent selling seen in the remaining 3 metals markets that we trade at LS Trader, gold, silver and Copper. The trend for the sector is still up and there are potential upside breakouts in the coming days.

Some big moves have been seen in certain commodity markets, such as Feeder Cattle, which this past week declined by 3.37%, following a similar decline during the previous week. This move has been sufficient to change the long term trend to down. Friday’s candle was a hammer, which suggests some buying at the lows of last week and may push the market slightly higher to test the underside of the trendline, currently around 148 before resuming the downtrend. Further out we may see a continuation lower to around 135.

Currencies

The dollar has had a positive week, with the dollar index moving higher by 0.63%. The biggest move of the week came against the Swiss Franc, where the dollar advanced by 2.43%. The dollar also had a good gain against the Pound, which now looks under pressure and may complete a change of long term trend to down in the near future should weakness continue. This week has seen the Pound move below the 200 day moving average for the first time since August and should the next level of support fail, we could see further declines to around $1.53.

The dollar has gained yet again against the Japanese Yen, and as with the Nikkei, any time that selling has appeared in the last 2 weeks, buying has been seen as evidenced by the long lower shadows on the weekly charts.

Interest rate futures

Interest rate futures moved slightly higher for second week, keeping the long term uptrend intact. As before, a change of long term trend to down is within range but so far any attempts to push down through support have been met with buying. Will an extended downtrend develop should support eventually be broken? Possibly. However, it would not surprise me should the much-anticipated collapse of this sector not occur to the extent that many expect. As ever, let’s let the markets tell us where and how far they want to go simply by following the trends as they develop.

Good trading

Phil Seaton

LS Trader System Update 13th January 2013

Stocks have continued in bullish fashion over the past week and have gone on to make new highs for the current run while the dollar has continued with long term weakness. The trends are therefore still up for stocks and bonds, mixed for commodities and mostly against the dollar. Dollar strength has continued against the yen but that is more to do with yen weakness than dollar strength.

Stocks

The March S&P 500 advanced by 0.65% for the week, taking out the highs of last year. The support zone provided by the window from the gap up 2 weeks ago that we wrote about last week has not been tested and that window may yet provide support on any weakness.

The March Nikkei 225 declined early in the week, closing the gap formed the previous week but then made a strong recovery, which recovered the earlier losses and took the index to new highs for the current move.

The Dax is drifting slightly lower in a tight range and the current uptrend may be coming to an end in the near future if weakness persists over the coming days.

This week in January is historically weak for some reason and often leads to large losses for stock indexes.

Commodities

Commodities have mostly benefited from a weaker dollar over the past week and even the grains sector, which of late has been highly bearish, managed to advance. The trend for grains is still very much down and with the biggest move of the week coming on Friday, it would be very premature to say that overall grains weakness is over on the basis of a single day’s trading. Friday’s jump in Corn came as the US stockpile came in lower than expected. The long term downtrend across the sector is still very much intact.

Palladium had a very volatile week highlighted by volatile trading on Monday that took the market below support. Palladium then reversed from below support to recover the week’s losses and the long-term uptrend remains intact. We may see the current trend resume if the market can clear the local top at 718.85 on the March contract.

Currencies

The dollar declined for the week, with the dollar index ending lower by 1.24%, erasing the gains of the three prior weeks. The long term trend is still down and remains against the dollar against the majority of the majors. This move in the dollar index was inverted by the Euro, which rose to its highest level against the dollar since April last year.

The Japanese Yen has continued with weakness, declining against the dollar for yet another week as the Yen fell to new 2 ½ year lows. The Bank of Japan this week added further stimulus and is now targeting higher inflation in order to bring an end to decades of deflation. It is expected that the BOJ will raise their inflation target from 1% to 2% and such expectations may spell further weakness for the Yen.

Interest rate futures

Interest rate futures managed to find support as once again the long term uptrend remains intact. A change of trend is well within range but any weakness is being met with buying. As we wrote last week, one of the biggest problems that sellers in this sector will likely face is that since so many people have been expecting a large downtrend for so long, that such a move may fail to fully materialize.

Good trading

Phil Seaton

LS Trader Weekly Update 6th January 2013

Last week we wrote: “Unless something dramatic happens over the next 3 trading days, the Santa Rally will have failed to materialize.” Well, something dramatic did happen with events surrounding the fiscal cliff resolution and bullish moves were seen in stocks, which erased the recent losses and saw the March S&P 500 slightly exceed the prior highs seen in December. The trends are therefore still up for stocks, mixed for the dollar and commodities and still up for bonds.

Stocks

The March S&P 500 made a large bullish move for the 4 day trading week, commencing with a rally on New Year’s Eve, gapping higher on Wednesday and closing the week ahead by 5.33%, keeping the longer term uptrend intact. Gaps, known as windows in Japanese trading literature, often provide good levels of support, with the lower end of the gap often providing the strongest measure of support. On that basis, March S&P 500 should find support around 1425 or higher should it be unable to hold new highs.

The Nasdaq 100, which has been the weakest of the stock indices we trade at LS Trader, and still the only index of the 4 still in a long term downtrend, managed a 4.91% gain on the March contract for the week. Longer term support at 2515 still remains intact and that may not now be tested until later in 2013.

The Nikkei 225, which is making a parabolic move on the basis of the weekly charts, advanced 3.86% for the week and completed an eight consecutive week of gains. The target of 10800 that we wrote about last week was exceeded during the week, but the market came off that a bit by Friday’s close. As with the S&P 500, the Nikkei may also find support from the gap around 10580 on the March contract.

Commodities

Last week we wrote that we expected considerable weakness in the grains sector, sufficient for the bull market seen in 2012 to be completely retraced as part of a new grains bear market. This week saw continued grains weakness and the trend is now down across the sector. We continue to look for lower prices longer term on the basis of our proprietary indicators. We expect this sector, which was very profitable from a spread betting perspective in 2012 to bring large profits again this year.

The long term trend is still up for the metals sector but once again weakness has been seen, possibly influenced by the prospect of a stronger dollar during the coming months. Copper and Palladium continue to be the strongest markets in the sector, with gold and silver both falling to 5 month lows. A change of trend to down for these two metals is within range.

Currencies

The dollar has been a mixed bag again this week, continuing on with the indecision seen the previous week. However, the dollar index did manage to advance by 1.03% for the week, largely due to its rise against the Euro, Pound and Yen.

The big moves have once again come from USD/JPY, which rose for an eighth consecutive week, adding another 2.41% to the recent move.

Interest rate futures

Large declines have been seen this past week in the interest rate futures sector, which may now be beginning to show be showing sufficient weakness to continue lower for a change of long term trend to down for the first time and what seems like an age. The largest move came for the 30 year T-bond, which fell 2.61% for the week and looks likely to be the first from this sector to have a change of long-term trend. One of the problems this sector may face is that so many people have been expecting a large downtrend for so long, that such a move may fail to fully materialize. As Market Wizard Paul Tudor Jones used to say, “That which is obvious is obviously wrong”.

Good trading

Phil Seaton

P.S. You can sign up for a 30 day trial of the LS Trader System here

LS Trader Weekly Update 30th December 2012

We’d like to wish all LS Trader readers and subscribers a Very Happy and Prosperous New Year!

Last week we wrote about the Santa Claus rally, which historically often brings a short and sweet rally to global stock indices during the last five trading days of the year and the first two trading days of the New Year. Unless something dramatic happens over the next 3 trading days, the Santa Rally will have failed to materialize. Based on historic data this points to a bear market for stocks in 2013 or at the very least, stock indices fall to much lower prices at some stage during the year ahead. This year, the focus has been much more on the fiscal cliff, and at the time of writing, the inability for Washington to reach an agreement to avert the crisis. Such an agreement may yet be reached, but how much impact that has on the stock markets remains to be seen.

With just one shortened trading day of the year left, the long term trend is still up for stocks, with the exception being the Nasdaq 100. The trend is still down for the dollar, with the exception still being the Yen, and is still mixed for commodities.

The aforementioned long term trends will likely change at some stage in 2013, with long-term chart structures pointing to weakness for stock indices and commodities, and a probable dollar rally. The question is, when will these changes occur? The answer is that we have to wait for the markets to show us where they want to go and simply follow the developing trends. Those that try to jump the gun and make predictions on where the markets are going and when they will turn, are often thwarted by the markets.

Stocks

The S&P 500 traded lower on each of the 4 trading days of the past week as volatility continues to pick up. The huge spike down on the 21st, which was subsequently largely retraced during the same day, was exceeded this week with a flurry of late selling on Friday. Such a move, as already mentioned has all but certainly put paid to any hopes for a Santa rally and although the long-term trend is still up, a change of trend to down is within range should there be further selling during the week ahead.

The Nasdaq 100, which has been the weakest of the stock indices we trade at LS Trader, ended the week lower by 2.8% and may now continue lower to the next support level around 2515 on the March contract.

The Nikkei 225 was the only index to rise this week, as the Japanese index rallied for a seventh straight week, advancing by a further 2.57%. Does this mean the rally is over? No. Sometimes markets can rally for an extended period and much longer than 7 weeks. That said, the Nikkei could be pulled back if weakness in other global indices extends, but the next target, assuming the trend remains intact will be 10800.

Commodities

The grains sector has remained under pressure this year as the unwinding of the bull market seen earlier this year continues. The long term trend is down across the sector and we may see an extended down move for grains in 2013.

The metals markets have remained mixed, with gold and silver essentially moving sideways. The long term trend for both remains up but that may change next year. Palladium remains the strongest of the sector.

The energy sector was higher, with advances seen in all markets with the exception of Natural Gas, which ended the week flat. The trend remains up for the sector with the exception of U.S. Crude.

Currencies

The dollar has been mixed this past week but the majority of moves have marginally favoured the dollar. The dollar index has printed a spinning top on the weekly charts, which is indicative of uncertainty in the currency markets.

Once again the big move has come from the dollar/yen, which advanced 2.21% this week, for a seventh week of gains. The trend remains bullish with support just north of 8300 on the March contract.

Interest rate futures

The hammer type patterns printed on the weekly charts of the interest rate futures markets that we wrote about during last week’s updates were the bottom, at least for the near term as the sector moved higher this week. There still appears to be limited upside but for now the long-term trend remains up across the sector.

Good trading

Phil Seaton

LS Trader Weekly Update 23rd December 2012

LS Trader would like to wish all our readers a very Happy Christmas. We hope you all enjoy the festive break.

The week ahead is supposedly the week of the Santa Claus rally, which often brings a short and sweet rally to global stock indices during the last five trading days of the year and the first two trading days of the New Year. Will Santa call this year? That remains to be seen. What we can say is that in the years that the Santa rally has not occurred, bear markets usually follow the next year, or at the very least, stock indices fall to much lower prices during the year. It would seem that this year the focus is likely to be more on the rhetoric coming out of Washington than any seasonal patterns or tendencies.

As we enter the final trading week of the year, the long term trends are up for stocks (exception being the Nasdaq 100), down for the dollar (exception being against the Yen) and mixed for commodities.

Stocks

In what was an extremely volatile week, the S&P 500 managed to end higher by 1.19% but it had made a large round trip in order to get there. On Tuesday the index reached its highest level for the current move and was beginning to look like a test of the highs of the year was on the cards. We then saw some weakness and a recovery, until the fireworks on Friday! Friday saw the largest one day move on the S&P 500 in a long time as the market collapsed in precipitous fashion only to find support at 1391.7 and then launch a strong recovery.

The sell-off was apparently triggered by news that a deal to end the fiscal cliff was unlikely to be reached when the market was expecting a resolution, and that had already been priced in. The sell-off and recovery suggests this was just a knee jerk reaction and that an agreement will be reached before the deadline, but the extreme selling may be a preview of what may happen should an agreement not be reached by the deadline.

The S&P 500 was not the only market affected as selling also hit the Nasdaq 100 on Friday, and to a lesser extent, the Nikkei 225. The Nikkei had earlier in the week reached our longer term target at 10200. The Nikkei also staged a good recovery following the sell-off and the trend remains up.

The Dax was seemingly unaffected and eased through quarterly expiration, ending the week ahead by 0.69%, also reaching our target of the May 2011 highs at 7700.

Commodities

Commodities have been very mixed this past week with some sectors advancing and some selling off sharply. Gold and silver have both continued recent weakness and although the long-term trend is up for both markets, both have hit multi-month lows this past week. Copper and Palladium also fell as the metals sector took a hit for the week.

Another sector under pressure has been the grain markets, which have continued to unravel the bull market seen earlier this year. The current chart patterns suggest that there is a good possibility that much if not all of the recent bull run will be erased in 2013. This will present some highly profitable spread betting opportunities over the coming months.

Some strength has been seen in the energies markets, all of which ended the week higher. The trend is still up for most of these markets, with the exception of U.S. Light Crude.

Currencies

The dollar index fell almost exactly to our target at 7900, reaching a low of 7901 before putting in a decent recovery, forming a hammer pattern on the weekly charts. The trend is still mostly against the dollar and we may yet see some further weakness before a larger dollar rally is seen in 2013.

Once again the British Pound rally has halted at $1.63 for the third time this year and this level now represents very strong resistance. That said, should the market be able to test and break through that level, a rapid rally to $1.67 may follow.

Interest rate futures

Interest rate futures all ended the week lower, but each of the markets put in a recovery during the later part of the week. Hammer type patterns have been seen on the weekly charts in the longer term markets, indicating support at the lower levels. As has been the case for what seems like forever, the long-term trends are still up and considerable further weakness will be required before that changes.

Good trading

Phil Seaton

You can sign up for a 30 day trial of the LS Trader System by clicking here

LS Trader Weekly Update 16th December 2012

The FOMC meeting came and went during the past week and delivered pretty much what market participants had expected, further stimulus. This led to further downside pressure for the dollar but did not do much for U.S. stocks, which have lagged behind their overseas counterparts.

As we move in to the last two trading weeks of the year, the long term trends are up for stocks, down for the dollar and mixed for commodities.

Stocks

The S&P 500 began the week in relatively convincing fashion, breaking through prior resistance and then continuing higher, but the latter half of the week saw the earlier gains erased. The trend is still up for the S&P 500 but this week’s price action has not been convincing.

The past week was even less convincing for the Nasdaq 100, the only stock index that we trade at LS Trader that is still currently in a long-term downtrend. The week ended with three strong selling days, which took the March contract back below the 200 day moving average.

The Dax added a fourth straight week of gains and now that the market has been able to hold above prior resistance, which should now act as support, we may see a move towards the May 2011 highs around 7700.

The Nikkei was the strongest of the stock indices and advanced 2.35% for the week, easily taking out our 9700 target in the process. The next target is our longer term upside target at 10200, which are the highs of the year so far.

Commodities

Gold and silver have both been further pressured this week as both metals declined for a third consecutive week. The trend is still up for both of these metals but there appears to be little buying at present.

Copper and Palladium fared considerably better, both continuing their recent up moves. Palladium has made a strong move higher over the past 7 weeks, rising from 589 to its present level of 702. The current level represents the highs of Q3 and is therefore likely to provide some resistance. However, if that resistance can be cleared look for a continuation higher to the highs of the year posed in February.

One commodity market that is trending very well and has done for several months is Coffee. Coffee, according to our proprietary trend indicators at LS Trader has been in a long-term downtrend since the middle of 2011, and this week has fallen to its lowest level of the year. Due to the extent of the recent trend, we may see further weakness into January and the market may yet head down further towards 13500 and possibly as low as 13000.

Currencies

With the exception of continuing its recent advance against the Yen, the dollar has declined across the board and the trend for the dollar is therefore very much down.

The dollar index, which is the best indicator of the general trend of the dollar since it is the dollar versus a basket of currencies, ended the week lower by 1.11%. This equated to the dollar’s lowest level in 8 weeks and keeps the trend for the index, and for the dollar overall, down. The next target will be support at 7900 and if that fails, the September low at 7872.

The past week has also seen quarterly forex expiration so the December contract has been rolled forward into March.

Interest rate futures

In spite of helicopter Ben’s promise to continue to buy bonds, the interest rate futures sector was lower, with the exception of the 3 month Eurodollar, which ended flat. The long-term trend remains up across the sector but how long the continues to be the case remains to be seen.

Good trading

Phil Seaton

You can sign up for a 30 day trial of the LS Trader System by clicking here

LS Trader Weekly Update 9th December 2012

The stock indices that we trade at LS Trader have continued to edge higher as we head towards the period known for the Santa Claus rally, which is generally bullish for stocks. Currency markets have been mixed with the trends now mostly against the dollar and commodity markets have also been mixed.

This week sees the FOMC meeting on Tuesday 11th.

Stocks

The S&P 500 advanced for a third straight, even though it was a minimal gain, but remains in a long-term uptrend and may yet move higher. Whether we see a test of the highs of the year remains to be seen, for now it certainly looks possible.

The Nasdaq 100, by far the weakest of the U.S. indices and still in a long-term downtrend, ended lower by 1.49% and remains below the 200 day moving average. The index may find resistance at the 200 day moving average and also slightly higher at 2700 should it reach that far. For now it remains range bound.

The Dax remains the strongest of the indices we trade at LS Trader and this past week hit new highs for the year as we suggested may happen in last week’s update. The May 2011 highs around 7700 will be the next target should the market be able to hold above prior resistance, which if the move is good, should provide some support.

The Nikkei also moved higher for a fourth consecutive week and remains on track for our target at 9700. Further out we may see a continuation higher towards the highs of the year at 10200.

Commodities

Gold continued its decline that began with heavy selling during the previous week. This selling continued and took the market below support and as low as $1684. There is some evidence of buying at those lows as seen by the long lower shadows on the daily candles, including a hammer on Friday. The trend is still up, with support between $1675 and $1684. Silver traded in a similar fashion to gold and also looks to be finding some short term support.

Palladium remains the strongest of the metals, and closed out a fifth straight week of advances. Copper also gained.

Currencies

The forex markets have been much more active this past week with several pairs experiencing some volatility. The USD/JPY ended the week flat but had been considerably higher and lower at different stages throughout the week and has therefore formed a long legged doji on the weekly chart, a pattern that indicates total confusion and indecision in this market. The almost identical weekly pattern happened in the previous week so for the short term there is no trend but the long term trend is still up. If support holds, and at this stage that is quite a big if, them the highs of the year formed in Q2 may still be tested.

The higher yielding commodity based currencies of Australia, Canada and New Zealand all gained this week, as did the British Pound, but the Euro fell and the dollar index advanced. Overall, a mixed bag for currencies, but the long term trends on balance are currently against the dollar once more.

Interest rate futures

As with the currencies, there has been considerable uncertainty in the interest rate futures sector. Both the 5 & 10 year T-notes formed doji on the weekly charts and the 30 year T bond ended marginally lower. For now the trend is still up across the sector with limited upside potential for the shorter term markets. However, the much-anticipated sell-off that many have been calling for since early 2011 has still yet to materialize and the trend is still up across the sector.

Good trading

Phil Seaton

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