Weekly Update – 13 May 2018 – LS Trader

US stocks have continued to recover from the sell-off earlier this year and show signs of renewed strength. It’s possible that we will see further strength and breakouts to new all-time highs over the coming weeks.

Stocks

The US stock indices remain in a long-term uptrend and have shown renewed strength this week. The S&P 500 has this week broken out of a large 3-month descending triangle. This breakout has been accompanied by a move above 60 on the RSI, which places the RSI back in the bull range for the first time since February. Volatility is at low levels and is starting to expand again which suggests this market has higher to run to the upside.

The Nasdaq 100 is stronger still and this weeks strength, which has also occurred on expanding volatility from low levels and a return to the bull range on the RSI suggests that further strength and new all-time highs will be seen in the coming months. This week’s price action has also completed the failure of the head and shoulders top, which if correct, projects a rally higher towards 7828, over 800 points higher than current levels.

Commodities

It’s important to always remember that we trade a market of commodities, not a commodities market. This means that each market must be assessed and traded on its own individual merits and chart structure. Some commodities can move up whilst others can move down.

The energy markets moved sharply lower on Tuesday but recovered to hit new highs for the current move on Thursday and all remain in uptrends. Natural Gas, which has been the laggard in this sector for a long time, is within range of an upside breakout.

Lumber remains a very strong market and has hit new all-time highs again. However, there are some reasons to have one eye on the exit. Sentiment has been and remains extremely high, and there is bearish divergence momentum setup that could potentially trigger this week. However, even if this trade does get stopped out it has been a huge winner for the LS Trader system.

Currencies

From last week: “The dollar continues to gain ground against many of the majors and we could see changes of the long-term trend against the British Pound and Euro, as well as in the dollar index itself over the next few weeks.” The dollar did complete a change of trend against the Euro, but some strength has been seen since the breakout. There was insufficient strength in the Dollar Index to complete a trend change to up, and the Pound has held up just above the key trend change level. However, if dollar strength resumes this week both trades could get triggered.

Interest rate futures

Interest rate futures moved slightly lower this week having been unable to clear resistance during the prior week. These markets, therefore, all remain in long-term downtrends.

Good trading

Phil Seaton

LS Trader

Weekly Update – 6 May 2018 – LS Trader

This week has seen continued dollar strength and we now have the dollar in a new long-term uptrend against a couple of the majors with possibly more to come this week.

The stock markets remain mixed, as do commodities. Interest rate futures are consolidating near their recent lows and remain in a long-term downtrend.

Stocks

The US stock indices have had a mixed week but the Nasdaq 100 ended higher by 1.61%, but both remain some way off their recent all-time highs and need considerable further strength before the uptrend resumes if indeed, it does.

The Dax and Nikkei, the two stock indexes that we trade which are already in long-term downtrends are roughly in the middle of the range from their January highs and February lows. A breakout in either direction is currently out of range.

Commodities

The energy markets shrugged off their recent correct, rallying from just above a key support level and went on to make new highs for the current move. Light Crude Oil came just 3 cents short of printing $70 for the first time since November 2014. Brent Crude remains the stronger of the two in terms of price, having hit $75.61 this week. The long-term trend remains up for the sector, but Natural Gas continues to lag.

Gold and Silver broke to the downside having broken support but have so far been unable to press further to the downside. The long-term trend is now down for all four metals that we trade at LS Trader.

From last week: “Lumber continues to run and shows no sign of stopping at present. There is no bearish divergence in momentum. The only negative is that sentiment is extremely bullish.” Lumber rallied to new all-time highs again. Sentiment remains extremely bullish, yet volatility is moderate and there is no momentum divergence, so we could have further to run.

Corn made its highest print in almost two years as several of the grains markets resume strength. Cotton also made its highest print in almost a year.

Currencies

From last week: “However, dollar strength is becoming evident against several of the major currencies, having already broken out against the Swiss franc this week. A change of long-term trend is within range for the Australian dollar this week, where major support is likely to be tested.” The Australian dollar broke support as expected to complete a long-term trend change to down, but so far without follow through.

The dollar continues to gain ground against many of the majors and we could see changes of the long-term trend against the British Pound and Euro, as well as in the dollar index itself over the next few weeks.

Interest rate futures

Interest rate futures continued their short-term corrective rally this week and came close to testing resistance, which has so far held firm. The long-term trend remains bearish and the RSI is in the bear range, where it has been since September last year.

Good trading

Phil Seaton

LS Trader

Weekly Update – 29 April 2018 – LS Trader

This week sees the 2-day FOMC meeting begin on Tuesday so we may see a quiet start to the week followed by an increase in volatility on Wednesday.

From last week: “Further breakouts and resumptions of the primary trend could follow this week, especially in the interest rate futures sector, where new lows for the year are within range.” This past week did see further breakouts, which included the 10 Year T-note. The 30-year T-Bond is one of several markets within range of breakout this week.

Stocks

Stocks have had another volatile but ultimately indecisive week as we have a second consecutive indecision bar printed on the weekly charts. Volatility has been higher on the Nasdaq 100 than it has been on the S&P 500 but both markets have closed the last two weeks roughly where they began them in spite of a couple of sizeable round trips.

The commitment of traders data shows that commercials have their biggest long position since late 2011 on the Nasdaq 100, and are net long where large speculators are net short. This is a fairly rare position and is typically bullish. The long-term trend remains up for US stocks but down for the Dax and the Nikkei.

Commodities

From last week: “Lumber, which is currently in a huge bull market, printed new all-time highs again this week and still has potentially further to run.” Lumber continues to run and shows no sign of stopping at present. There is no bearish divergence in momentum. The only negative is that sentiment is extremely bullish.

Several commodities are within range of breakouts this week with a mixture of long and short breakouts in the offing. Grains are turning bullish again and may test key resistance, whereas metals are looking weak and may test support/breakout to the downside this week.

Currencies

From last week: “The Dollar Index is once again pushing up towards that key level of resistance which if successfully taken out may lead to a period of dollar strength. However, the long-term trend remains against the dollar.” The Dollar Index finally broke resistance but remains in a long-term downtrend.

However, dollar strength is becoming evident against several of the major currencies, having already broken out against the Swiss franc this week. A change of long-term trend is within range for the Australian dollar this week, where major support is likely to be tested.

Interest rate futures

From last week: “Both the 10-year and Long bond could also make downside breakouts this week. The trend remains down for the sector.” The 10 Year T-Note did break to new lows for the current move as yields crossed above 3%. The long-term trend is down for the 10 Year Note. However, there is potential bullish divergence evident on the daily chart but as yet no trigger. The 30-year T-Bond rallied from support but remains in a long-term downtrend, and the trend remains down for the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 22 April 2018 – LS Trader

From last week: “Many markets have corrected against their primary trends over the past few weeks, but several looks set to resume their longer-term moves as early as this week.” This past week has been more active than the recent few weeks as multiple markets did breakout as expected. Further breakouts and resumptions of the primary trend could follow this week, especially in the interest rate futures sector, where new lows for the year are within range.

Stocks

The Nasdaq 100 ended the week higher by 0.5% but has printed a doji on the weekly charts with a long upper shadow. This has bearish implications for the short-term as a doji is an indecision bar, and the long upper shadow shows that the highs of the week are strongly rejected after the run-up of the past three weeks. The long-term trend is still up for the Nasdaq 100, but we’re now in the middle of the range with no short-term trend evident.

Price action in the S&P 500 has been very similar, and no short-term trend is evident. The same is true for the Dax and the Nikkei, but both are weaker than their US counterparts due to having fallen sufficiently in February to complete long-term trend changes to down.

Commodities

From last week: “Heating Oil and RBOB Gasoline could breakout this week.” Both Heating Oil and RBOB Gasoline did breakout this week but as yet have had little in the way of follow through. Both of these markets continue to lag the stronger Crude Oil Markets, with Brent Crude being the strongest at present.

Gold continues to coil in a range just below a key resistance level (neckline of a large inverted head and shoulders). The market could break either way at this stage but the breakout, when it comes, is likely to yield a big move. Silver was the stronger of the two precious metals but remains in a long-term downtrend for now. A change of trend to up is within range.

Lumber, which is currently in a huge bull market, printed new all-time highs again this week and still has potentially further to run.

Currencies

From last week: “The area around 90.50 is significant resistance for the Dollar Index as that level represents a change of polarity resistance from the September 2017 lows and also the high of this year.” The Dollar Index is once again pushing up towards that key level of resistance which if successfully taken out may lead to a period of dollar strength. However, the long-term trend remains against the dollar.

Interest rate futures

From last week: “Friday closed below the 50-day MA on the Long Bond, and we may see prices head back towards the February lows. The shorter-term markets in the sector remain weaker and could test support as early as this week. The long-term trend remains down across the sector.” The shorter-term markets did test support as expected and both the 3-month Eurodollar and 5 Year T-notes broke to new lows for the current move. Both the 10-year and Long bond could also make downside breakouts this week. The trend remains down for the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 15 April 2018 – LS Trader

The past week has been a continuation of the calm before the storm. Many markets have corrected against their primary trends over the past few weeks, but several looks set to resume their longer-term moves as early as this week.

The long-term trends remain mixed for stocks and commodities, but down for the dollar and interest rate futures.

Stocks

From last week: “The S&P 500 has closed right on its key 200-day moving average and remains perilously positioned above MA support and the February lows. For now, the trend remains up, but that picture could quickly change.” The 200-day MA held, and the market ended the week higher. However, Friday printed an indecision pattern on the daily chart with the high for the day just below the 50-day MA. Prices currently are sandwiched between the two MAs and could go either way.

The Dax’s recovery continued, crossing both the 50 and 200-day MAs this week, but finding resistance at the later and turning down on Friday. The long-term trend remains up for US stock indexes and down for the Dax and the Nikkei.

Commodities

Gold reached a high of $1369.4 this week before pulling back but remains within the range of a potential key breakout. There is an inverted head and shoulders pattern evident on the weekly chart which dates back to 2013 which if completed would give a target in the region of $1720, large upside potential.

The energy markets have got back on track, and their recent correct declines have come to an end, with both Light Crude and Brent Crude breaking out to new highs for the current move. Both markets made their highest print this week since late-2014. Heating Oil and RBOB Gasoline could breakout this week.

Currencies

From last week: “The area around 90.50 is significant resistance for the Dollar Index as that level represents a change of polarity resistance from the September 2017 lows and also the high of this year.” This resistance area continues to hold, and as long as it does the focus is towards lower prices for the Dollar Index.

The inverse is true for EUR/USD, which remains above its key support zone and may push higher this week. The British Pound continues to advance and may be set to test its January high soon. The RSI remains in the bull range, and the long-term trend remains up.

Interest rate futures

The long bond tested resistance again around the 147 level and once again turned lower, keeping the long-term downtrend intact. Friday closed below the 50-day MA on the Long Bond, and we may see prices head back towards the February lows.

The shorter-term markets in the sector remain weaker and could test support as early as this week. The long-term trend remains down across the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 8 April 2018 – LS Trader

Volatility in stocks has continued. The S&P 500 has closed right on its key 200-day moving average and remains perilously positioned above MA support and the February lows. For now, the trend remains up, but that picture could quickly change.

Stocks

US stocks ended the week lower and had big down days on Friday. For now, the long-term trend remains up but key trend-defining support are within range of being tested this week, and it’s possible that we could see a change of long-term trend to down completed in the next week or so.

The Dax finished the week higher by 0.49% but remains in a long-term downtrend, and the same can be said for the Nikkei. At present, the long-term trend remains up for US stocks but down for international stocks.

Commodities

The grains markets had a volatile week this week on speculation of tariffs affecting a few markets in the sector. However, the markets quickly shrugged that off and price action was strong on Friday. The long-term trend remains up, and we could see Corn and Soybean Meal breakout to the upside this week.

The energy markets have continued to decline this week, but for now, the long-term trend remains up for the sector.

Lumber resumed its long-term uptrend by breaking out to new all-time highs this week and could yet have further to run.

The metals markets remain mixed. Palladium has closed the week lower for six consecutive weeks, and for ten of the last twelve weeks. Silver remains in a long-term downtrend and is trading near support with a breakout to the downside possible. According to COT data, the small speculator as the most bullish it has been since 2009. Lasting rallies rarely commence when the small speculator is more bullish than commercials and large speculators.

Currencies

The Dollar Index has continued to make its counter-trend move but is at medium-term resistance, with the long-term trend remaining down. The area around 90.50 is significant resistance for the Dollar Index as that level represents change of polarity resistance from the September 2017 lows and also the high of this year.

The inverse, of course, is true for the Euro, which is now testing key support.

Interest rate futures

From last week: “The long bond is now in the zone between the 38.2 and 50% retracement levels of the decline from the December high, which is about the level that normally sees a correction of this degree fizzle out. The 50% retracement level is at 147.37.” The long bond turned lower at the expected resistance zone and traded lower until Friday. The long-term trend remains down for the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 1 April 2018 – LS Trader

The past week was a shortened trading week due to Good Friday, and Thursday’s close also saw the end of the first trading quarter of the year. The first quarter has been far more volatile in many markets than recent quarters but has also been profitable to trade in spite of some large swings in the markets. That volatility is expected to continue for the foreseeable future and should bring with it plenty of large moves and profitable trading conditions.

The long-term trends remain mostly as before, mixed for stocks, up for commodities (with a few exceptions), down for the dollar, and down for interest rate futures.

Stocks

From last week on the Nasdaq 100: “Additionally, sentiment has become extremely negative with only 10% bulls. The last time sentiment was this low was the end of the early February sell-off. A substantial rally followed.” Stocks bounced this week as suggested in last week’s update from extremely negative sentiment readings.

The long-term trend for US stocks is still up at monthly and weekly chart level but is turning negative on the daily timeframe. However, a change of trend to down for either the S&P 500 or the Nasdaq 100 has yet to be completed.

The Dax fell to new lows for the current move but reversed higher. However, the trend remains down, and the market is below resistance. The Nikkei also rallied and was strong enough to take out short-term resistance. The long-term trend remains down for the Dax and Nikkei but still up for the Nasdaq 100 and S&P 500.

Commodities

Brent Crude completed its highest monthly close in almost three years in spite of a bit of a pullback this week. The long-term trend remains up for both Crude markets, and new multi-year high monthly closes are not bearish.

After a few weeks of selling, some of the grains markets had extremely bullish days on Friday, namely Corn, Soybeans and Soybean Meal. This may indicate that the correction in these markets is over and the local top may be tested, with possible breakouts this week.

One important observation in the commodities markets is commercial buying of many commodities markets as reported in the COT data (Commitments of Traders Reports). This indicates that commercials are expecting inflation and higher prices and a likely bull market in commodities. Commercials are often early, so we have to wait for trend confirmation and buy triggers, but once these moves get going, they are likely to be big.

Currencies

The currency markets continue to consolidate, much as they have since the middle of January. The long-term trend remains against the dollar.

Interest rate futures

Interest rate futures have continued their short-term counter-trend rally this week and are now approaching levels that could provide resistance and a possible turn lower to resume the long-term downtrend.

The long bond is now in the zone between the 38.2 and 50% retracement levels of the decline from the December high, which is about the level that normally sees a correction of this degree fizzle out. The 50% retracement level is at 147.37.

Good trading

Phil Seaton

LS Trader

Weekly Update – 25 March 2018 – LS Trader

Global stocks took a heavy hit this week, ending the week sharply lower. Sentiment has become extremely negative for stocks, so with the long-term trend remaining up for US stocks, it is possible that we will see a bounce higher this week, but things look to be taking a turn for weakness in the longer-term. For the first time in a long time, we have no long entries for any of the stock markets and look likely to add to our short positions over the next week or so on sell triggers.

Stocks

From last week on the Nasdaq 100: “The decline below the prior January high has bearish implications so we may see further weakness this week”. The Nasdaq began the week with weakness and continued sharply lower, ending the week down 7.06%. However, along with the S&P 500, the long-term trend is still up. Additionally, sentiment has become extremely negative with only 10% bulls. The last time sentiment was this low was the end of the early February sell-off. A substantial rally followed.

The Nikkei completed a change of long-term trend to down on Friday and joined the Dax in a long-term downtrend. However, the Nikkei is currently the weakest of the four stock indexes that we trade at LS Trader based on the current chart structure. The Nikkei ended the week lower by 5.89%

Commodities

From last week on Brent Crude: “Support from the triangle held exactly, and we saw a breakout of the triangle on Friday, which suggests further strength ahead. The trend remains up.” Brent Crude continued to rally and will likely breakout to new highs for the current move early this week.

The rally in the grain markets appears to have fizzled out, and we have gone from being net long the grains sector to short. Soybean Meal remains the strongest in the sector and may rally to test the local top in the coming weeks.

Gold held support and has rallied sharply over the last three days and may now press higher towards resistance. Silver broke out to the downside on Tuesday but was unable to continue lower and has since rallied back to test resistance. The trend remains down for Silver.

Currencies

The currency markets remain quiet, as they have for the past few weeks. The long-term trend remains against the dollar. The Dollar Index and the Euro remain rangebound.

The Yen has rallied to its highest level against the dollar since November 2016. There is bullish divergence on USD/JPY, but for now, the trend remains against the dollar.

Interest rate futures

Interest rate futures continue to grind higher in a counter-trend move. The long-term trend remains down across the sector, but moderate strength continues to be evident in the short-term. The shorter-term markets remain the weakest for now, but they are likely to test resistance this week. It is possible that resistance will hold as there is short-term bearish divergence where we have a new high in price without a new high in momentum.

Good trading

Phil Seaton

LS Trader

Weekly Update – 18 March 2018 – LS Trader

This week sees the FOMC Meeting with the Fed expected to raise rates in their announcement on the 21st March. This rate increase is already priced into the markets.

Overall, it’s been a quiet week in the markets, but things will likely pick up this week around the time of the aforementioned Fed announcement on Wednesday.

Stocks

The Nasdaq 100 began the week with strength as expected, printing a new all-time high on Wednesday at 7214.5 on Tuesday before pulling back for the rest of the week. The decline below the prior January high has bearish implications so we may see further weakness this week, but for now, the trend is still clearly bullish, and the market is above support.

The S&P 500 also began the week with strength but was unable to continue the rally. Volatility has declined sharply since late January. Friday saw a narrow range 7 bar printed, which is a good setup for a low volatility breakout in the direction of the open on Monday. The long-term trend remains up

Commodities

From last week: “Brent Crude has been trading in a symmetrical triangle pattern since late January….The long-term trend remains up, so the odds favour a breakout to the upside.” Support from the triangle held exactly, and we saw a breakout of the triangle on Friday, which suggests further strength ahead. The trend remains up.

Gold looks set to test the recent low, which if broken would have the downtrend back in effect with room for further declines down towards the mid-December low around $1240. Weakness is evident in all the metals markets at present. Silver is also close to a downside breakout. Silver is the weakest of the metals as it never completed a change of trend to up when the rest of the sector did.

Currencies

The currency markets remain quiet for the most part, likely waiting for this week’s Fed meeting before making their next move. The long-term trend continues against the dollar.

The weakest currency at present is the Canadian dollar which is back at levels not seen since June last year. The dollar rallied from support this week and ended the week higher by 2.2%.

Interest rate futures

The shorter-term markets remain the weakest in the interest rate futures sector. The long bond rallied to its highest level in over a month this week but pulled back on Friday. The long-term trend remains down across the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 11 March 2018 – LS Trader

The past week has seen bullish price action in US stocks, led higher by the Nasdaq 100 which made a new all-time weekly closing high on Friday. That is not a bearish characteristic.

Multiple other markets have continued to consolidate as they digest the recent spike in volatility. The long-term trends remain as before, up for stocks, mixed to up for commodities, and down for the dollar and interest rate futures.

## Stocks

From last week: “The Nasdaq remains the strongest of the stock indices and new highs are still a possibility and could be seen this week.” As expected, the Nasdaq 100 rallied to new all-time highs this week. Perhaps of significant importance is that fact that the breakout occurred on Friday, with a close above the breakout level.

As we have been saying for years, the most important price of the week is Friday’s close, as that is the price that traders are willing to hold their positions over the weekend. It carries even more importance in recent times due to 24-hour markets and, therefore, daily closing prices having less significance than they once did. Another bullish factor is that Friday’s breakout completed a cup and handle continuation pattern. Also, Friday’s close took the RSI back into the bull range, above 60.

The S&P 500 also continues to recover and is within range of a breakout to new highs. The Dax and Nikkei both remain weaker, with the Dax already in a long-term downtrend. The long-term trend for the Nikkei remains up.

## Commodities
Brent Crude has been trading in a symmetrical triangle pattern since late January and is now at the point along the triangle towards the apex where a breakout can be expected. Technically, that breakout is already late and overdue. The long-term trend remains up, so the odds favour a breakout to the upside. A similar pattern can also be seen in Light Crude.

However, it’s not all bullish for the sector as both Heating Oil and RBOB Gasoline have potential head and shoulders top patterns forming. These are not perfect patterns as the right shoulder is much shorter in time duration than the left shoulder. However, a break of the neckline in both markets would result in a change of long-term trend to down, and the breakouts would have very favourable asymmetric risk/reward.

Gold ended the week flat and has seen weakness since the failure to push through resistance from the September high. A break of the recent low would have bearish implications.

## Currencies
The currency markets have been quiet for the past couple of weeks, but the trend remains against the dollar.

## Interest rate futures
Interest rate futures have consolidated this week but remain in long-term downtrends. The shorter-term markets remain the weakest of the sector. The 10 Year T-note and 30 Year T-Bond are within range of new downside breakouts.

Good trading

Phil Seaton
**LS Trader**