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.
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.
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.
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.