Weekly Update 13 September 2015 – LS Trader

The past week was a shortened week due to the Labor Day Holiday in the U.S. on Monday. It has seen mixed trading in many markets with the stock indexes higher and the dollar lower.

This week sees another 2-day FOMC meeting begin on the 17th. This meeting is one that many expect to see the Fed raise interest rates for the first time in nine years. Friday this week is triple witching, which can often be a volatile day.

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

Stocks

Stock indexes had a mixed week but ended higher. The long-term trend remains down for all of the stock indexes. We have written previously about the key levels in the stock markets, which were the prior major support levels. These levels, once broken, were due to act as resistance. In the case of the S&P 500, Nikkei 225 and the Dax this resistance level has held, but the Nasdaq 100 broke it on an intra-day basis. The RSI remains in the bear range for all of the four stock indexes that we trade at LS Trader.

Either way, the price action seen since the low was printed on the 24th August looks corrective and, therefore, is likely a pause before the downtrend resumes. Therefore, unless the resistance levels mentioned above are broken, we can still look for new lows below the 24th August low.

Seasonally we’re in a very weak time of year for stocks. This is often due at least in part to portfolio managers rebalancing their portfolios and clearing out stocks that they don’t want to hold. Subsequently, September is the weakest month of the year for the S&P 500, Dow 30 and Nasdaq dating back to 1950. Whether that plays out this year or not remains to be seen

Commodities

Coffee continues to trend lower, this week making its lowest print since January 2014. Further weakness towards 100, which is the next level of support may be seen. If coffee does fall that far, strong support can be expected as this level has been a support zone for coffee since 2006.

Both gold and silver traded lower this week, but trade is far from convincing. Silver remains below a downward sloping trendline that has remained intact since the May 2015 high. Gold remains below a trendline that has held since January. If that trendline is broken, that would be the first sign that a low was in. The long-term trend remains down for both markets as it also does for copper and palladium.

One of the biggest moves this week came in the lumber market, which looks as though it has found a bottom, at least for the time being. Lumber broke resistance on Tuesday and then rallied sharply higher for the rest of the week. The rally included a gap higher on Friday’s open, which is typically bullish and also saw the RSI move above 60 for the first time since June. This suggests further strength ahead, but it will take considerable further rally for a change of long-term trend.

Rough Rice also made a bullish move, rallying for four straight days this week to reach its highest level since January. The RSI broke easily through the 60 level, and there is little in the way of resistance on the chart between current prices and the 13.50 area.

The energy markets have mostly consolidated this past week. Natural gas has traded in an incredibly tight range for the past three weeks. Watch this market for a breakout and a potentially explosive move. The long-term trend remains down for the whole sector.

Currencies

The past week saw quarterly currency contract expiration, so we rolled from September to December, which is now the front-month contract. The week has seen mostly weakness for the dollar and the dollar index. The long-term trend is currently down for the dollar index, and the RSI remains in the bear range.

The Euro, which is a near perfect inversion of the dollar index, rallied for four days this week but remains in the middle of its recent trading range. The commodity-based currencies all remain in long-term downtrends and are near their respective recent lows. Of these three currencies, the Aussie has been the most bullish this week. However, due to the recent tightening of the range in these currencies, each of them is within range of testing resistance.

Interest rate futures

Interest rate futures continue with mixed trades. There is very little in the way of trend in this sector at present, which is amply highlighted by the RSI hovering around the 50 level. The 3 Month Eurodollar remains the strongest in the sector and is still very much in an uptrend. The trend is also still up for the 5 Year T-note but is down for the longer-term markets in the sector.

Volatility is likely to increase this week in the bond markets due to the FOMC meeting.

Good trading

Phil Seaton

LS Trader

Weekly Update 6 September 2015 – LS Trader

Following the extreme volatility of the two previous weeks, the past week has seen a return towards more normal market conditions. However, volatility in stocks has still been much higher than the rest of the year to date, and there have also been some large moves in the energy markets.

The week ahead is a shortened trading week due to the Labor Day holiday in the U.S. on Monday. Tuesday onwards will see traders and money managers returning to their trading desks following the summer break. This typically leads to a large increase in trading volume and normally sees the volatility due to less liquidity decrease.

Stocks

Stocks have been considerably less volatile this week than what was seen in the previous two weeks. The bear market rally that began at the low on August 24th may have ended this week on Monday’s high. Stocks have since turned lower.

As we mentioned may be the case in last week’s update, the lows that had acted as support for the stock markets did change to become resistance, as support once broken often becomes resistance. This level held on each of the stock indexes that we trade at LS Trader and remains the key resistance level. As long as these resistance levels hold we can continue to look for lower levels.

The long-term trends are down for stocks, and the RSI is in the bear range. This adds to the expectation of lower levels ahead. At a minimum, we should see a test of the August 24th lows in the coming weeks.

The Nikkei is currently the most volatile of the stock indexes at present with the past two weeks featuring near 2000 point daily ranges, and regular daily moves in excess of 1000 points. These are not normal conditions at all. However, the major support low that held the market up for months has since acted as resistance, almost exactly to the point. The outlook for the Nikkei remains bearish while that remains the case.

The Volatility Index Futures (VIX) rose above 30 for the first time since 2011.

Commodities

The energy markets rallied sharply higher on Monday, bringing the downtrends to an end for now in Crude Oil, Brent Crude and Heating Oil. These were all profitable trades for the LS Trader system. However, the longer-term downtrend remains intact, so we view these corrections as bear market rallies and still expect these markets to fall to new lows. Time will tell of course.

The metals markets have been mixed. Silver had closed higher for six straight days before closing lower on Friday. However, the rally could best be described as a market rising in agony as the real bodies were all small, and each has a long higher shadow, which indicates higher prices levels are being rejected. The long-term trend remains down for silver as indeed it does for all the metals we trade.

Copper has been the strongest of these metals this week, rising above resistance, bringing another profitable short trade to an end. However, it looks like that was a corrective rally, and that new lows lie ahead.

Palladium has been in the biggest downtrend of all the metals in recent months, but the last two weeks have seen some strength. However, the market has held below resistance and the RSI has been unable to clear the 50 level and, therefore, remains very much in the bear range.

Currencies

The dollar index edged higher this week as the dollar gained against most of the majors, particularly the commodity-based currencies of Australia and New Zealand, and to a lesser extent against the Canadian dollar. These moves have the dollar at or near its highest level against these currencies for over six years.

The British Pound has continued its steep decline against the dollar, having now closed lower for nine straight days. This weakness has returned Cable to the middle of the trading range that has been in place for 2015. The Euro has also been weak since the high printed on the 24th August and is also roughly in the middle of its recent trading range.

Interest rate futures

Interest rate futures ended the week higher, and the outlook for these markets remains mixed. As before, the long-term trend is still down in the 30 Year T-Bond and the Long Gilts but is up for both the 5 & 10 Year T-Notes and the 3 Month Eurodollar.

Good trading

Phil Seaton

LS Trader

Weekly Update 30 August 2015

The volatility that had been seen during the prior week was exceeded this week, as we saw many markets experience levels of volatility not seen for many years, certainly not since at least 2008.

The corrective rallies seen in stocks and commodities are currently viewed as corrections in a larger bear market, so they have not impacted on the long-term trends. The current long-term trend position is down for stocks and commodities, but mixed for currencies (mostly favouring the dollar) and mixed for interest rate futures. This means that we have very likely not seen the end of these moves and that bigger moves are ahead.

Stocks

The S&P 500 fell through the next level of support on Monday but found support from above the October 2014 low. Once the bear market resumes, last week’s low and then subsequently the October 2014 low, which stands at 1790.25 basis the continuous back-adjusted contract, will be the target. It would take a rally back to new all-time highs to change the outlook, and for that to happen following the decline seen recently is not how markets typically behave, so we view that as unlikely.

It’s a similar position for both the Nasdaq 100 and the Dax. The Dax has more room for a decline before it reaches the October 2014 low, which is at 8383, some 1888 points below Friday’s close.

The Nikkei completed a change of trend to down this week, but that change will not be confirmed until Monday’s low, at 17190 is taken out. The rally from Monday’s low has risen to the prior support level, which should now act as resistance if we are to see lower levels again soon.

The VIX, which known as the fear index, shot higher on Monday to levels not seen in years. This indicates that the complacency that has been in place for many investors for a few years is now over. We can, therefore, expect further volatile moves in the stock markets in the near future, and eventually significantly lower prices. The lows seen last week, and the aggressive bounce that followed are probably just the start of what may see stock indexes move sharply lower over the coming months. The biggest up-moves come in bear markets, and the corrective rallies seen over the past few days in stocks are about as big as they come.

From a technical perspective, when looking at a chart, the largest bar visible for the period under consideration sets the trend. This week the biggest one-bars are to the downside, and these bars seen on Monday were the biggest in many years. In spite of the strong rallies seen since Monday’s lows, none of the daily bars was larger from high to low than Monday’s down bars.

Commodities

The volatility seen in stocks filtered through into some other markets but not to the same extent. There were very big moves seen in energies on Thursday and Friday, but we had not earlier seen the large swings that were present in stocks. When looked at from a larger perspective, the two-day rallies seen in the energy markets are normal corrections in a bear market. They are not as yet trend-defining moves, nor are they anywhere near to being trend defining moves, they are just bear market rallies. The long-term trend for all the markets in the energy sector remain down, and the RSI for each is still in the bear range. Therefore, once these counter-trend rallies exhaust themselves, we can continue to look for new lows.

Currencies

The currency markets have also seen some wild moves this week. The dollar index dropped through major support but then reversed sharply higher, ending up for the week, and the Euro was a near-perfect inversion of that price action. The biggest move in the currency markets came in the Yen, which saw a huge level of volatility, but ended the week not far from where it began. The long-term trends in the currency markets still favour the dollar on balance.

Interest rate futures

The interest rate futures markets rallied sharply higher on Monday in response to the stock markets sell-off. These moves then reversed as stocks rallied. In spite of the recent strength and the rally seen on Monday, the 30-year T-Bond remains in a long-term downtrend, as does the Long Gilt. The shorter-term markets have each been stronger and saw rallies to new highs this week. These markets have not been able to hold onto their gains and have since moved back below the prior highs. This suggests additional weakness in the short-term.

Good trading

Phil Seaton

LS Trader

Weekly Update 23 August 2015 – LS Trader

The past few days have seen some of the most volatile trading conditions in recent times. These moves have continued on from the volatility that began during the previous week, and has resulted in the stock indices breaking major support levels and confirming a change of long-term trend to down for the first time since 2014.

The long-term trends based on LS Trader’s proprietary algorithm are now down for stocks and commodities, mixed for interest rate futures and up for the dollar.

Stocks

From last week: “The long-term trend is currently up, but a breakout from this box range could lead to a substantial move in the direction of the breakout. This range-bound trading has continued for longer than normal, and a decisive breakout is long overdue.” A decisive breakout is exactly what we got, and this large move confirmed a change of trend to down for the S&P 500. The RSI also dropped easily through the 40 bull market support level, ending the week at 26.02, firmly in the bear range.

In just three days the S&P 500 fell from its high of 2103.75 to its low on Friday at 1967.25, a staggering decline of 136.5 points. A move of that magnitude has not been seen since 2008. It’s fair to say that the long-term trendline from the October low is well and truly broken and is now no longer valid. It’s worth noting that this week saw a trendline break on the weekly chart that has supported prices since October 2011. The long-term trend is now down.

The Nasdaq 100 made a similar move, also breaking its equivalent trendline and falling through the 40 level on the RSI, confirming a change of long-term trend to down in the process.

The Dax broke down through major support one day ahead of its U.S. counterparts, falling from its high of the week at 11114 on Monday, to its low on Friday at 9980, for a 1134-point drop in just one week. The Dax, therefore, confirmed a change of trend to down one day ahead of the U.S. indices. Of the four indices that we trade at LS Trader, only the Nikkei remains in a long-term uptrend, and that could change soon if weakness continues.

Commodities

Gold may be off to the races based on its advance this week and the fact that the RSI broke above the 60 bear market resistance level on the RSI. This is the first time the RSI has cleared the 60 level decisively since February when gold was more than $110 higher than today’s prices. Further strength looks likely, and a possible change of trend to up may follow in the coming days.

The energy markets continue to take a battering as Crude Oil and Brent Crude both fell to new multi-year lows. Heating oil and No Leaded gas have also seen weakness and both look to be heading down towards their respective January lows.

Currencies

The dollar has seen weakness this week against most of the majors. This weakness led to us exiting USD/CHF, and a very profitable short NZD/USD trade, where we banked 424 pips profit in just a week less than three months in the trade.

The Euro has risen sharply this week against the dollar and may continue higher to test trend defining resistance at the May high. Should this high be broken, the Euro may continue higher and possibly as high as the $1.2200 area over the coming months.

Weakness in the dollar index has continued, and we could be seeing a move lower to test major trend-defining support over the coming week or so. The RSI has already dropped through bull market support at 40, which suggests further weakness lies ahead.

Interest rate futures

Interest rate futures were higher this week. As before, the leading markets in this sector are the shorter-term markets such as the 3 Month Eurodollar and the 5 Year T-Note, both of which rallied to new highs this week. The long-term trend for both of these markets remains up.

The long-term trend for the longer-term interest rate futures, such as the 30 Year T-Bond, 10 Year T-Note and Long Gilts are all still down, but strength continues to be seen in the short-term. Whether we see sufficient strength for a change of trend in any of these markets over the coming weeks remains to be seen.

Good trading

Phil Seaton

LS Trader

Weekly Update 16 August 2015 – LS Trader

The past week has seen some volatile swings in several markets, which have seen some large daily moves in both directions. Such moves have been seen in stock indices and currencies. Precious metals have bounced, but overall commodities remain weak, highlighted by continuing weakness in the energies sector, where Crude Oil dropped to a new 6½ year low on Friday.

The long-term trends by sector are unchanged and are still up for stocks and the dollar, mixed for interest rate futures, and down for commodities.

Stocks

The S&P 500 has had a volatile week. Having opened in bullish fashion on Monday, a reversal was seen on Tuesday which continued Wednesday, culminating in a spike low and a sharp reversal back higher. This spike briefly pierced the long-term trendline, but the market recovered to end the week higher. The RSI is at 48.14, which indicates an almost total lack of trend, as the market trades in what is effectively a large box range that has been in place since February. The long-term trend is currently up, but a breakout from this box range could lead to a substantial move in the direction of the breakout. This range-bound trading has continued for longer than normal, and a decisive breakout is long overdue.

Commodities

Gold and silver both rallied this week, and both cleared their respective trendlines, which have been in place since June and May respectively. The long-term trend is still down for both metals, and the RSI remains in the bear range, which suggests that once this counter-trend move is over, we may yet see declines to new lows again. Copper fell to its lowest level since May 2009, but Palladium did not make new lows this week and has rallied to test resistance. Resistance will likely be tested again this week, but the trend remains down for the sector.

In spite of some strength seen in the metals, the commodities sector continues to take a battering. The Bloomberg Commodity index dropped to its lowest level in 13 years this week, and commodities are down 62% since the top back in July 2008.

Crude oil dropped to its lowest level in 6½ years on Friday and is now down some 72% from the big $147 top in July 2008. Our long-standing target of 33.55, which is the 2009 low looks as though it could be reached this year. In terms of a correctly spliced together back adjusted contract, which forms a seamless stream of data without price gaps due to rollovers, Crude Oil is at its lowest level since our data began, all the way back to 1983. Brent Crude has also been extremely weak, but not quite as week as Light Crude.

Currencies

The dollar index moved lower this week, breaking support in the process. The dollar has been weak against most of the majors this week. The Australian dollar has seen some very volatile trading this week, with a break of resistance, followed by a reversal to new lows, and then a reversal higher once more. The long-term trend is still down. The dollar continues to fare better against the other two commodity-based currencies of Canada, and New Zealand, and the dollar remains close to its recent high against both currencies.

As before, the big level to watch in the currency markets is the July low in the Euro. There have been several attempts at testing that level and so far each of them have held firm, which has resulted in the Euro returning to the middle of its recent range. The trend defining range is now considerably narrower than normal and a breakout in either direction could feasibly be seen over the coming weeks. If The July low is broken, that would strongly indicate a move lower and an eventual test of the March low. Conversely, a break of the May high would suggest a larger counter-trend rally, possibly to as high as the $1.2200 area.

Interest rate futures

Interest rate futures remain mixed. As before, the long-term trend is down in the longer-term markets in the sector but is still up in the shorter-term markets.

The long bond has been strong for the past few weeks and this week moved well past the 61.8% retracement of the decline from the April top. There was a spike higher on Wednesday, but the market was unable to hold those levels and dropped back, ending the week lower.

The 5 Year T-Note, which has been the strongest in the sector, rallied to a new high on Wednesday, exceeding the previous high posted back in April. However, as with the long bond, the 5 Year was unable to hold on to the gains and pulled back, ending the week slightly lower.

Good trading

Phil Seaton

LS Trader

Weekly Update 9 August 2015 – LS Trader

The past week has seen an increase in volatility in the stock indexes and also the start of what may be a period of sustained weakness for stocks. For now the technicals remain intact and in favour of the long-term uptrend, but not much additional weakness is required for that to change.

The dollar has had a mixed week, as the dollar index broke through resistance twice, but as yet without follow through, while the Euro held key support. Interest rate futures and commodities have also been mixed, but the overall commodities bear market is very much intact.

Stocks

The S&P 500 and Nasdaq 100 both moved lower this week, with the latter taking out key short-term support. However, for now at least, both indexes remain in long-term uptrends. Both also remain above their long-term trendlines and are also still in the bull range on the RSI. The S&P 500 may test short-term support and its trendline this week, and may also test bull market support at 40 on the RSI. If these levels are broken, it will indicate that the top may be in, at least for the coming months.

Of the four indexes that we trade at LS Trader, the Nikkei 225 remains by far the strongest in terms of proximity to its recent top. The Nikkei, however, is below its trendline from the October low, which it broke early last month.

Commodities

Brent Crude ended the week lower and caught up with Light Crude in that it has now taken out its low of the year, which in the case of Brent was posted back in January. RBOB gasoline, which has been the strongest in the sector this year, traded sharply lower this week and will likely test trend defining support in the coming days.

Silver rallied this week and met key short-term resistance and also hit the trendline from the May high. This makes last week’s high a key level. Any strength above last week’s high would break resistance and the trendline, and would suggest that we were going to see a counter-trend bounce higher over the next few weeks. The long-term trend, however, is unlikely to change for the foreseeable future. Currently, it would take a move above 1786 for the trend to change, which is a long way above current prices.

Gold has effectively traded sideways for the past 14 sessions but is gradually working its way up to test resistance. Copper and Palladium remain weaker that the two precious metals, and both have fallen to new lows for the current move this week. The trend remains down across the sector.

Currencies

The dollar index briefly pierced key resistance this week but has so far been unable to press higher. This is very likely due to the inability of the Euro to break its key support level. Ideally both breakouts need to happen together as one will confirm the other. The Euro will need to break support for the index to advance much further. Therefore, the July lows for the Euro are key not just for the Euro, but also for the dollar index and the dollar as a whole.

The commodities based currencies, which have been by far the weakest of late, have bounced higher this week, and the trends in the Australian and New Zealand dollars may be coming to an end for now. The Canadian dollar did fall to a new multi-year low this week but has since recovered some of the prior losses. The long-term trend, however, continues to favour the dollar almost across the board.

Interest rate futures

The trends in the interest rate futures sector remain mixed, and as has been the case for the past few weeks, there are no trends present in the sector. The long-bond has continued with its counter-trend rally and has this week reached its highest level since the end of April. The trend, however, remains down.

The long-term trend is also down for the 10 Year T-note and the Long Gilt but remains up for the 5 Year T-note and the 3 Month Eurodollar. If stock index weakness persists, we may see a flight to safety in the buying of bonds.

Good trading

Phil Seaton

LS Trader

Weekly Update 2 August 2015 – LS Trader

It’s been a mixed week for several markets and sectors this week as many markets have seen swings both up and down at different stages in the week. The long-term trends remain as before and are still up for stocks, mostly up for the dollar, down for commodities and mixed for interest rate futures markets. Several markets remain poised for what could be key breakouts as numerous markets are within range of testing important support and resistance levels.

Stocks

The Nasdaq 100, which is currently our only long stock index trade at present, fell early in the week but then recovered well, retracing almost 50% of the decline from the 20th July high. The long-term trend remains up, and the RSI is still in the bull range. The market also remains above the long-term trendline from the October low, which currently supports the market around 4389.

The S&P 500 has seen similar price action this week, almost retracing 78.6% of its recent decline. Often when a move retraces more than 78.6% of a decline it goes on to retrace the full amount, so we could yet see another go at the recent highs. The long-term trend remains up, but the RSI continues to be range-bound between 40 and 60 as it has for nearly all of this year to date, which is very indicative of a choppy, sideways market. A clear break out of this range on the RSI may result in a decent move.

From a seasonal perspective, we remain in a weak time of year. 1988 to 2014 has August as the weakest month of the year for both the Dow and the S&P 500.

Commodities

The energy markets remain weak. Light crude this week feel below its March low basis the back-adjusted continuous contract, but has so far not continued much lower following the break of the key low. The trend is very much down, and the RSI is in the bear range. Brent Crude has also been weak but remains above its low that was formed back in January. That level could be tested this week. RBOB gasoline remains the strongest of the sector and has yet to break down and remains a long way above its January low.

Following the recent capitulation of the metals, we have seen a couple of weeks of consolidation as the metals hold just above their recent lows. Copper was the only market in the sector to print new lows for the current move this week. The long-term trend remains down for all four markets in the sector. As before, sentiment is very negative towards the metals, so a bounce would not be a surprise, but the longer-term trend looks set to remain down for quite some time yet. A considerable rally will be required for any of the metals to rally sufficiently to trigger a change of trend to up.

Currencies

The dollar has had a mixed week of trading which has seen some swings in both directions against several of the majors. The dollar index has remained range-bound for the past few months and has so far been unable to break through resistance. It’s a similar story for the Euro, only inverted. In the Euro, key support continues to hold as the market remains in a box range that has held since April. There will eventually be a breakout from this range and that breakout should yield a decent move. The odds slightly favour that the breakout will be bullish for the dollar and probably lead to a rally back towards the highs of the year in the dollar index, and for the Euro to head on down to test the March lows.

Interest rate futures

The trend for interest rate futures remains mixed, with the long-term trend still up for the shorter-term markets, but still down for the longer-term markets. In the short-term, however, there is strength being seen in the sector. The long bond has rallied to its highest level since early May, but a considerable further rally will be required for a change of trend to up to be seen.

The 5-year T-Note remains the strongest of the sector at present, and may breakout to the upside this week, as may the 3 Month Eurodollar.

Good trading

Phil Seaton

LS Trader

Weekly Update 26 July 2015 – LS Trader

The past week has seen considerable weakness in the metals and energy markets and sentiment is reaching extremely bearish levels in both of these sectors. The S&P 500 matched its high of the year but was unable to break through, and selling followed, which took the Nasdaq 100 lower as well. The dollar has seen mixed trading but did reach new multi-year highs against a couple of the majors. Interest rate futures have rallied as stocks have sold off, and commodities, for the most part, remain deeply in a bear market.

Stocks

The S&P 500 matched its May high to the point, but was unable to print new highs. The RSI also failed once again to clear the 60 level, and the market turned sharply lower. The long-term trend remains up but this week’s weakness has seen the S&P 500 fall to within the middle of the wider trading range, meaning that a downside breakout is as likely as a breakout to new highs. These are interesting times for global stock indexes and the consolidations that have lasted for pretty much all of this year to date could be coming to an end.

Commodities

From last week: “This move saw Gold drop below the key November 2014 lows and may now continue lower towards our next target at 1090.” Gold dropped like a stone during a period of heavy short selling shortly after the markets opened late Sunday night, easily falling through our target at 1090. Further weakness followed later in the week, which culminated in a new low on Friday at 1073.7, basis the December contract. This is Gold’s lowest print since September 2009. The RSI fell 20 20.21, its lowest level since April 2013.

Silver has also seen some weakness but remains above its December low. That low was at 1427.5, and could be tested this week. Copper fell to a new six-year low, and that does not bode well for the global economy. Copper is known as Dr Copper due to it being a good indicator for the global economy, and the moniker stems from the idea that the metal has a PhD. in economics.

Probably the only bullish thing that can be said for the metals at present is that sentiment is reaching extreme bearish levels and this often indicates that all those that want to sell the market are already in and that there is, therefore, little left in the way of selling pressure. However, sentiment is by no means a timing indicator, as sentiment can remain negative against a market for months.

Sentiment is also very bearish against the crude oil markets, where the percentage of bulls has dropped to just 8% in Crude oil. Brent Crude fell through support as suggested in last week’s update and continues to head lower. Crude has fallen to within a dollar of the March low at 47.35, basis the back adjusted continuous contract. We continue to look for new lows in both Crude markets although Brent still has almost $5 lower to go.

Currencies

The currency markets have been mixed, with continued dollar strength being seen against the commodity-based currencies, where new multi-year highs have been seen against both the Australian and Canadian dollars. The other majors have been less clear, but both the Euro and Swiss Franc are approaching very key levels, and these levels could be tested in the coming days.

Of particular interest will be the dollar index, which is just below key resistance, and the Euro, which is close to testing key support. If both of these markets breakout (dollar index up and Euro down) then we can expect to see continued dollar strength that should lead to a rally for the dollar index back towards its highs for the year, and the Euro fall lower towards its low for the year. Such moves would also lead to dollar strength against the rest of the majors.

Interest rate futures

The interest rate futures markets have rallied this week, in particular, the longer-term markets, which is as expected due to the weakness seen in stocks this week. The long-term trends are still mixed in the sector, with the shorter-term markets remaining in long-term uptrends and the longer-term markets still in downtrends. It will take considerable rally for any of these markets to regain their highs posted earlier in the year, and it would probably take a steep sell-off in the U.S. stock indexes in order to see such a move.

Good trading

Phil Seaton

LS Trader

Weekly Update 19 July 2015 – LS Trader

The past week has seen bullish moves in the stock indexes and the dollar. The Nasdaq 100 rallied to new multi-year highs, but as yet the move is unconfirmed by other U.S. stock indexes. The long-term uptrend for the dollar remains intact, and this past week has seen further dollar gains against most of the majors. The commodities markets remain mixed, as do interest rate futures.

Stocks

The Nasdaq 100 put in a very convincing five-day rally to easily take out the June 2015 high. The rally was more than sufficient to see the RSI move above 60 and back into the bull range. Further rally may be seen, and we can look for support on any reversal at the level of the prior highs, around 4550. If the uptrend is good, 4550 should hold.

The S&P 500 also rallied this week, but has been weaker than the Nasdaq 100 and has so far fallen short of new highs. The RSI closed right on 59.99 this week so may move above 60 in the coming days. If it does, we should see a rally to new highs.

The Nikkei has also rallied but unlike the Nasdaq 100, there has been a considerable loss of momentum over the past few sessions, which has resulted in the RSI being unable to clear the 60 level. The long-term trend is still up.

Commodities

Both metals and energies remain under pressure. Selling this week saw Gold complete a trend change of down to join the other three metals in a long-term downtrend. This move saw Gold drop below the key November 2014 lows and may now continue lower towards our next target at 1090.

Palladium remains by far the weakest of the metals, and it continues to trend nicely lower and may extend lower towards 575, the 2012 low. Silver saw some strength early in the week but has since turned lower, keeping the downtrend intact.

Crude fell to its lowest level since the 1st April and should head on down to test the March low which currently sits at 47.35 basis the back-adjusted continuous contract. Brent may also breakout to the downside this week and may also extend lower towards its low of the year posted back in January. RBOB remains by far the strongest market in the energy sector.

The grains markets have had very mixed weeks; corn, soybean meal and soybeans all made new highs for the current move but have since turned over and have given back some of the recent gains. Corn has been particularly weak and will likely test support in the coming days. Wheat has been weaker still and broke support earlier in the week.

Currencies

The long-term dollar uptrend is getting back on track. Decent moves have already been seen against the commodity-based currencies of Australia and New Zealand, and this week saw dollar strength reach six-year highs against the Canadian dollar. With the exception of the British Pound, the dollar is in range of breaking out against all of the remaining currencies that we trade at LS Trader, and the uptrend may also resume in the dollar index over the coming week.

The Euro has shown quite a bit of weakness and may this week fall sufficiently to resume the long-term downtrend and looks set to move ultimately lower to test its March low. If this breakout occurs and is confirmed by an equivalent breakout higher in the dollar index, then we can look for continued dollar strength and a rally to above the year’s highs.

Interest rate futures

The long-term trends in the interest rate futures sector remain mixed. The 3-month Eurodollar and the 5-Year T-Note both remain in long-term uptrends, but the other three interest rate futures markets that we trade at LS Trader, the 30 Year T-Bond, 10 Year T-note and the Long Gilts are all still in long-term downtrends. The longer-term markets in this sector have seen some strength this week with the long bond rallying for four days. Other markets remain weak and within range of their recent lows.

Good trading

Phil Seaton

LS Trader

Weekly Update 12 July 2015 – LS Trader

The past couple of weeks has seen a considerable increase in volatility in several markets, due in part to what is happening in Greece and events in China. At the time of writing, the situation in Greece remains unresolved, so there could be further volatility this week depending on what happens.

The long-term picture however remains unchanged at present, with the long-term trends still up for stocks (that could change any time), mostly up for the dollar, down for most commodities and mixed for interest rate futures. This current mix is indicative of uncertainty in the markets on the whole and is something that we expect will be resolved soon, with some large moves very much due over the coming weeks.

Stocks

The stock markets gapped lower on the open last Sunday night and then had a very mixed week of rallying and selling. Based on our long-term trend analysis the long-term trend is up in all four stock indexes that we trade at LS Trader. However, considerable technical damage has been done, which includes seeing the markets break and stay below their long-term trendlines from the October lows, as well as seeing a break of RSI bull market support at 40. These two technical events often occur ahead of trend changes, but as yet critical long-term support has held in all four markets. That could change though at any time.

Commodities

We wrote in last week’s update that weakness was returning to the energy markets and, in particular, the crude oil markets. That was 100% correct as this week saw heavy selling in the oil markets, which was sufficient to resume the downtrend. In spite of a bounce seen during the second half of the week, the trend remains down, and we continue to look for weakness to take out the March lows over the next few weeks.

The grains markets have also seen some large moves with a mixture of strong and weak trade seen in different markets in the sector this week. Soybeans and soybean meal both saw weak trade early in the week, followed by renewed strength, which in the case of meal saw the market recover to a new high for the current move and reach its highest level in 8 months.

London Cocoa has also been strong of late, this week rallying to its highest level since April 2011. The next target lies at 2236. If that level can be cleared, there is potential for considerable further rally higher.

Currencies

The long-term trends on balance still favour the dollar, particularly against the commodity-based currencies of Australia, Canada and New Zealand, which are the weakest currencies at present of those that we trade at LS Trader. The New Zealand dollar fell to new six-year lows this week and, the Aussie also fell to its lowest level since 2009. The Canadian dollar looks set to test its March lows against the dollar, and if support there is taken out we could see a move lower towards its March 2009 low.

Interest rate futures

Interest rate futures saw considerable volatility during the past week. The markets in this sector gapped higher on the open on Sunday night and rallied considerably higher before then reversing lower again.

The 3-month Eurodollar and the 5-Year T-Note both remain in long-term uptrends, but the other three interest rate futures markets that we trade at LS Trader, the 30 Year T-Bond, 10 Year T-note and the Long Gilts are all still in long-term downtrends. Depending on what happens in Greece this week we could see further large swings in this sector.

Good trading

Phil Seaton

LS Trader