Weekly Update – 30 September 2018 – LS Trader

The past week has seen stocks unable to make new all-time highs and has also seen some strength return to the US dollar. Strength has also been seen in the energy markets.

Stocks

The S&P 500 failed to make a new all-time high this week and saw some weakness, but for now, continues to trade above support. The Nasdaq 100 remains weaker than the S&P 500 and failed to confirm last week’s all-time high. The trend remains up for both US indices and it will for the foreseeable future unless we get a huge meltdown.

From last week: “The head and shoulders pattern in the Nikkei is now well underway following a decisive break above the neckline. As per our comments last week, the pattern now projects higher to 24690.” The Nikkei was the strongest of the four indices we trade this past week and this week’s high of 24320 is well on the way to our target of 24690, which may be seen this week.

Commodities

Commercial traders have moved to net long the Silver market this month for the first time in history, which is a possible indication of a rally ahead. The LS Trader system was stopped out of our extremely profitable short trade on Silver this week where we had ridden the trend lower since the 27th June short entry at 1639. Friday’s strong up day was accompanied by above average volume. The long-term trend remains down, but a rally may be in the cards.

Gold also has a minimal net long commercial position but the trend remains down and active as the market has not been able to breach resistance.

Palladium is the strong horse in the sector, but Friday’s candle was a doji, and with both volatility and sentiment at very high levels, we may see a correction soon. The long-term trend, however, remains up, and a test of all-time highs which were printed back in January at 1124.9 may be seen over the coming weeks.

The energy markets have rallied this week. Brent Crude ended the week higher by 4.99% has rallied to its highest level since November 2014. Crude Oil also surged 4.03%. Heating Oil, which was the first market in the sector to breakout to the upside, advanced 5.72% and is also at its highest level since November 2014. The long-term trend is up for all energy markets.

Currencies

USD/JPY has continued higher to reach its highest level since December 2017. This week’s price action has consolidated above the top of a symmetrical triangle that dates back to 2015. This suggests that the current move has a long way yet to run over the medium-term timeframe.

Interest rate futures

Interest rate futures remain in long-term downtrends but have ended the week higher, having printed new lows for the move earlier in the week.

From last week on the 30 Year T-Bond: “The right shoulder low at 141.09 was broken, which invalidates the potential head and shoulder bottom and now projects further weakness towards 135.” This week’s low was the lowest low for almost four years.

Good trading

Phil Seaton

LS Trader

Weekly Update – 23 September 2018 – LS Trader

The past week has seen mixed trading in the markets. The S&P 500 made a new all-time high. The dollar has seen continued short-term weakness overall. Interest rate futures have resumed long-term weakness and commodities remain mixed.

Stocks

From last week: “The Nasdaq 100 and S&P 500 both held above support and remain bullish. The S&P 500 looks poised for new all-time highs again this week.”

The S&P 500 did break out as expected to print new all-time highs. The Nasdaq 100 continues to lag but did bounce successfully from support once again to keep the trend intact.

The head and shoulders pattern in the Nikkei is now well underway following a decisive break above the neckline. As per our comments last week, the pattern now projects higher to 24690.

The Dax, which is the weakest of the global stock indices we trade at LS Trader and is the only one of the four in a long-term downtrend, saw additional strength this week in what is a counter-trend bear market rally.

Commodities

Palladium has had an excellent week with a large upside rally which completed the trend reversal. The long-term trend for Palladium is now up, the only one of the four metals we trade where that is the case. Copper has also seen strength this week but remains in a long-term downtrend.

Currencies

The currency markets have seen mixed trading. Strength has been seen in USD/JPY, which broke out to new highs for the current move having exceeded the July high. USD/CHF broke to new lows, completing a long-term change of trend to down. This is the first of the currencies to move into an uptrend against the dollar. The dollar remains in a long-term uptrend against all the other major currencies.

Interest rate futures

Interest rate futures have seen continued weakness this week as the long-term downtrend continues for the sector.

From last week: “We have written in recent weeks about the potential head and shoulders bottom on the 30 Year T-Bond. That pattern never broke the neckline and has since turned south and now looks set to test the right shoulder, at 141.09. If the market falls below that level, the head and shoulders pattern will fail and would give a downside target in the region of 135.” The right shoulder low at 141.09 was broken, which invalidates the potential head and shoulder bottom and now projects further weakness towards 135.

Good trading

Phil Seaton

LS Trader

Weekly Update – 16 September 2018 – LS Trader

Not much change was seen in the bigger picture this week with the long-term trends continuing to favour stocks and the dollar. The trends remain mixed for commodities with strength in some sectors, but weakness overall. The long-term downtrend for interest rate futures resumed this week.

Friday was also triple witching with quarterly stocks and currencies rolling forward to the December contract.

Stocks

The long-term trend remains up for three of the four stock indices that we trade at LS Trader, with the trend up for the S&P 500, Nasdaq 100 and Nikkei, and down for the Dax, which is by far the weakest of the four. The Dax did manage a corrective rally this week, and the long lower shadows of three of the past six daily buys do show demand coming into the market at those levels. However, the trend remains down, and it will take an additional 1000+ point rally to change that.

The Nasdaq 100 and S&P 500 both held above support and remain bullish. The S&P 500 looks poised for new all-time highs again this week.

The false breakout of the head and shoulder pattern on the 30th August now appears to be a premature breakout as strong buying action on Thursday and Friday broke the neckline again and exceeded the August high. The pattern now projects higher to 24690, some 1595 points above Friday’s close.

Commodities

The metals markets have had a mixed week with some strength and weakness being seen. Overall, the entire sector remains in a long-term downtrend with only Palladium showing any real signs of strength in recent weeks.

The energy sector has also seen some weakness again this week. Brent Crude pushed right up to test resistance but was unable to push through and fell back into the weekend. The long-term trend remains up for energies, but weakness is evident in the short-term.

Currencies

The dollar index tested support this week and support held firm. The long-term trend remains up for the dollar against all of the major currencies. The weakest currencies at present, namely AUD/USD and NZD/USD both managed a small corrective bounce this week but remain in long-term downtrends.

Interest rate futures

Interest rate futures have seen continued weakness this week with both the 5 Year T-Note and 3 Month Eurodollar breaking out to the downside to resume the long-term downtrend. The initial target for the Eurodollar is 96.90 and possibly 96.69 over the coming months.

We have written in recent weeks about the potential head and shoulders bottom on the 30 Year T-Bond. That pattern never broke the neckline and has since turned south and now looks set to test the right shoulder, at 141.09. If the market falls below that level, the head and shoulders pattern will fail and would give a downside target in the region of 135.

The long-term trend remains down for the entire US interest rate futures sector in spite of near-record commercial net long positioning (which has decreased over the past few weeks). The trend for UK Long Gilts remains up.

Good trading

Phil Seaton

LS Trader

Weekly Update – 9 September 2018 – LS Trader

Stocks have seen some weakness this week, but except for the Dax remain in long-term uptrends. The commodity-based currencies have seen further weakness. Interest rate futures have been unable to make any upside progress, and commodities remain mixed, but weak overall.

Stocks

From last week “Two possible negatives are the bearish divergence on MACD and the fact that historically, September is the weakest month of the year for stocks.”

The Nasdaq 100 fell just short of making new all-time highs this week and fell sharply, narrowly holding above support. That support level looks likely to be tested this week. The long-term trend remains up and the RSI is in the bull range, but we may see the 40 level tested this week as well.

The S&P 500 has seen similar action but has held up slightly better than the Nasdaq 100. The long-term trend remains up for both US indices.

The Nikkei also saw continued weakness this week following the failed breakout above the neckline of the head and shoulders continuation pattern. Support was broken, but the long-term trend remains up.

The Dax broke support and may decline further to test the March lows. Large head and shoulders top is forming on the weekly chart, which would indicate massive declines for this index over the coming months if completed, The long-term trend is down for the Dax, the only one of the four indices we trade at LS Trader that is in a downtrend.

Commodities

Palladium saw some further strength this week, but momentum is waning. The decrease in the size of the real bodies on the daily candles and the long upper shadows indicate resistance. However, Palladium is by far the strongest of the metals and may complete a trend change to up in the coming weeks. Gold, Copper and Silver all remain in long-term downtrends and are trading below resistance.

Gold has seen net long commercial buying activity this week for the first time since early 2001, which suggests that this downtrend may be about done. However, the long-term trend remains down, but we can expect resistance to be tested this week.

The grains markets remain in long-term downtrends with Oats and Wheat being the exceptions. New lows in these markets could yet be seen as the entire sector looks weak.

Currencies

The Australian Dollar continues its recent decline, falling to new lows for the current move and making its lowest print since February 2016. The New Zealand dollar also fell to a new low for the current move and also its lowest print since February 2016. The commodity-based currencies are all weak as the Canadian dollar is also in decline and may breakout this week.

Interest rate futures

Interest rate futures have seen some weakness this week, particularly on Friday. In spite of the near-record commercial buying, these markets can’t make any headway at the moment and remain in long-term downtrends.

Good trading

Phil Seaton

LS Trader

Weekly Update – 2 September 2018 – LS Trader

The bull trend for global stocks remains intact. This week saw both the Nasdaq 100 and S&P 500 print new all-time highs. The dollar continues to consolidate but remains in a long-term uptrend. Commodities remain mixed, and interest rate futures remain in a long-term downtrend in spite of record net long positioning of COT commercials.

Monday is Labour Day in the US so most markets will be closed.

Stocks

From last week “The S&P 500 rallied to within a point of all-time highs, basis the continuation futures contract, but did print a new high basis the SPX. Strength remains in the US stock markets. The Nasdaq 100 is close to a test of all-time highs as well and could break out this week.” Both the Nasdaq 100 and the S&P 500 called to new all-time highs this week, and the long-term trend remains up. Two possible negatives are the bearish divergence on MACD and the fact that historically, September is the weakest month of the year for stocks.

Also from last week: “The Nikkei continues to advance from what may prove to be a right shoulder low of a possible inverted head and shoulders, which, if completed, would change the trend to up.” The Nikkei did break the neckline of the head and shoulders pattern and completed the change of trend to up. However, the breakout did not hold, and prices fell back to within the prior range but did hold above support. The lack of follow-through following the breakout is negative and we’ll need to see strong price action early this week for the pattern to remain intact.

Commodities

The energy markets are showing some signs of early strength. Heating Oil was the first to breakout and resume the uptrend. Brent Crude is moving to the top of the range of a near 4-month rectangle mentioned in prior weeks. A breakout could see Brent rally towards the 87.00 level in the coming weeks.

Metals have seen some mixed price action this week. All markets in the sector remain in long-term downtrends, but Palladium has put in a strong rally and is by far the strongest in the sector. A change of trend to up is within range. Gold, Silver and Copper all remain in current downtrends and are all below resistance.

From last week: “Soybean Meal broke to the downside this week, completing a continuation rectangle pattern. If the pattern reaches its target, prices should decline to around the 300 level in the coming weeks.” Soybean Meal continued to decline, printing a low of 302.60, just above our 300 target. The trend remains down.

Currencies

The Dollar Index moved lower this week but appears to be finding support around the 94.34 area. The long-term trend remains up and continues to favour the dollar against all of the majors. The dollar is strongest against the Australian Dollar, which fell to new lows for the current move on Friday, making its lowest print since December 2016.

Interest rate futures

In spite of record long positioning by commercials as reported in the COT report, interest rate futures have been unable to make any upside progress and remain, as a sector, in a long-term downtrend. Prices did see a partial recovery later in the week to claw back declines seen during the first half of the week. Upside breakouts and change of long-term trend to up remain within range on the 10 Year T-Note and 30 Year T-Bond.

Good trading

Phil Seaton

LS Trader

Weekly Update – 26 August 2018 – LS Trader;

The past week has seen slight new all-time highs for the SPX, with both S&P 500 and Nasdaq 100 futures very close to their all-time highs. The dollar is undergoing a correction lower. Interest rate futures continue to show signs that they may have bottomed in the intermediate term with a possible change of trend to up within range. Commodities markets remain mixed.

Stocks

From last week on the S&P 500: “The trend remains up, and we may yet see another test of all-time highs.” The S&P 500 rallied to within a point of all-time highs, basis the continuation futures contract, but did print a new high basis the SPX. Strength remains in the US stock markets. The Nasdaq 100 is close to a test of all-time highs as well and could break out this week.

The Nikkei continues to advance from what may prove to be a right shoulder low of a possible inverted head and shoulders, which, if completed, would change the trend to up. For now, the long-term trend remains down.

Commodities

The lows printed during the previous week may end up being the lows for the time being. Sentiment had reached extremely bearish readings and is now moving up along with the price. We may see Gold and Copper both test resistance this week. The long-term trend remains down for the sector and will do so for some considerable time yet.

Recent corrective strength in the grains sector may have run its course as multiple contracts turned lower this week. Soybean Meal broke to the downside this week, completing a continuation rectangle pattern. If the pattern reaches its target, prices should decline to around the 300 level in the coming weeks.

Currencies

The dollar has seen some weakness this week and the period of recent dollar strength may be about to take a breather. However, the long-term trend continues to favour the dollar, and that will remain so for the near term at least. For now, current downtrends stay in place for AUD/USD and GBP/USD.

Interest rate futures

The long commercial position on the COT report reached a new record net long once again this week on the 10 Year T-Note. Prices continue to advance towards a test of the neckline of an inverted head and shoulders bottom. A change of trend to up is within range for multiple markets in this sector, which suggests that interest rates will be heading lower, not higher as the majority expects.

Good trading

Phil Seaton

LS Trader

Weekly Update – 19 August 2018 – LS Trader

The long-term trend remains up for US stocks and the US dollar. The trend for interest rate futures remains down but is on the verge of changing. Commodities remain in a long-term downtrend with only a few exceptions. The energy sector, which has been the strongest of the commodities for much of this year is possibly on the verge of breaking down and a trend change.

Stocks

The S&P 500 has had a mixed week. Weakness was seen during the first half of the week before a reversal from Wednesday’s lows. The trend remains up, and we may yet see another test of all-time highs.

From last week: “The Dax has seen continued weakness this week and may be headed lower to test the June lows. The RSI has been unable to get above the 60 level and remains in the bear range.” The Dax did test key support, which has so far held. It’s likely that we will see another test of support this week with a breakdown and resumption of the long-term downtrend on the cards.

The Nikkei displays a possible inverted head and shoulders, which, if completed, would change the trend to up.

Commodities

The metals markets have seen continued weakness this week with all four markets that we trade falling to their lowest level of the current move.

The energy markets have also continued their recent decline. For now, the entire sector remains in a long-term uptrend, but that could change in the coming weeks. Brent Crude is making a series of lower lows and lower highs and has also broken through the bottom of an almost 4-month rectangle, so far without follow-through.

Currencies

The dollar index rallied to its highest level since June 2017 this week but did print an ugly candle on Wednesday with downside confirmation following on Friday. Sentiment remains extremely bullish so we may see some additional weakness this week. The long-term trend remains bullish and continues to favour the dollar across the board.

Interest rate futures

The long commercial position on the COT report reached a new record net long this week with speculators recording a new record net short position. Such a profile, as we have written in recent weeks often resolves itself in favour of the commercials. For now, the long-term trend remains down but could change to up with additional strength. The head and shoulders bottom pattern continues to form.

Good trading

Phil Seaton

LS Trader

Weekly Update – 12 August 2018 – LS Trader

The past week has seen stocks stall from below their recent all-time highs and turn lower but remain in very established long-term uptrends. The dollar has resumed its long-term uptrend as expected, with multiple breakouts this week. Commodities remain weak, and interest rate futures could be building up for a further rally and a potential change of long-term trend.

Stocks

The S&P 500 reached its highest level since the January all-time high the week before weakness appeared during the second half of the week.

The Nasdaq 100 began the week with strength but fell just short of testing the recent all-time high, before moving lower on Friday. The long-term trend remains up, with the RSI in the bull range. New highs may yet be seen in both US indices.

The Dax has seen continued weakness this week and may be headed lower to test the June lows. The RSI has been unable to get above the 60 level and remains in the bear range.

Commodities

The metals remain in long-term downtrends, but there has been a lack of progress to the downside over the past few weeks, which suggests that the trend is stalling and possibly bottoming. However, the long-term trend is firmly down, three of the four metals are trading well below resistance, and the RSI remains in the bear range, and the rallies have seen the RSI unable to clear even the 40-50 level.

Currencies

From last week: “The dollar has seen a resumption of strength this week against several majors and is within range of breakouts in the Dollar Index, Euro, Australian and New Zealand Dollars. Sentiment remains extremely high in favour of the dollar.”

The dollar did breakout as expected in the Dollar Index, Euro, Australian and New Zealand Dollars. The long-term trend now appears to be back on track and favouring the dollar.

Also from last week: “The British Pound remains the weakest currency of the majors at present and the only one in an ongoing trend. The July 19th lows are likely to be tested this week.” The July 19th lows were tested and exceeded on Monday as the Pound fell out of bed against the dollar. This week’s 1.8% decline took the Pound down to its lowest level since June last year against the dollar.

Interest rate futures

From last week on interest rate futures: “…the possibility of a sharp rally increases as time goes on.” Interest rate futures rallied this week as expected and there was a sharp rally on Friday. This looks to be consistent with a low being in for now and could be the right shoulder of the previously mentioned head and shoulders pattern rallying towards the neckline.

The COT report has commercials at a record net long position again, and this provides a tailwind for rallies. There’s a good chance that we will see further strength in these markets and a test of the neckline at a minimum, with a change of long-term trend to up likely to follow.

Good trading

Phil Seaton

LS Trader

Weekly Update – 5 August 2018 – LS Trader

Strength is resuming in US stocks and the dollar, where the long-term trends both remain up. The long-term trends in other markets remain down for interest rate futures and most commodities.

Stocks

The S&P 500 has bounced multiple times off the top of the large symmetrical triangle pattern. This happened again this week with the index coming within a few points of support but holding firm. The long-term trend remains up, and the RSI is in the bus range. For now, nothing has changed in the analysis with a bullish outlook and an expectation of a test of all-time highs in the coming weeks.

The Nasdaq 100 began the week with a continuation of the prior week’s sell-off but reversed course this week after breaking short-term support. The RSI, however, found support above the 40 level and remains in the bull range. The long-term trend remains up, and new highs could be seen this week.

Commodities

The metals remain in long-term downtrends, with Gold currently being the weakest having fallen to new lows for the current move this week. Gold, Silver and Copper all showed some strength on Friday and possible reveal patterns, but these markets all remain below resistance.

The energy markets continue to decline, but all remain in long-term uptrends. Brent Crude is in a multi-week rectangle pattern which could act as a continuation or reversal rectangle. However, on balance, such patters resolve in the direction of the trend prior to the pattern, which in this case is up.

The grains markets have seen some strength this week, but the long-term trend remains down except for Rough Rice. Oats, which is often considered to be the leader of the grains complex has seen impressive strength this week and is now trading at its highest level since early March, with a change of long-term trend within range.

Currencies

The dollar has seen a resumption of strength this week against several majors and is within range of breakouts in the Dollar Index, Euro, Australian and New Zealand Dollars. Sentiment remains extremely high in favour of the dollar.

The British Pound remains the weakest currency of the majors at present and the only one in an ongoing trend. The July 19th lows are likely to be tested this week.

Interest rate futures

From last week: “Weakness has been seen this week, and we may see further selling and a possible test of the recent lows. The long-term trend remains down for the sector.”

Weakness was seen again in the sector this week before a reversal on Thursday. The commercial long position in the 10 Year T-Note hit a new all-time high this week on the COT report, and the RSI has reversed from bull market support. For now, the trend remains down, but the possibility of a sharp rally increases as time goes on.

Good trading

Phil Seaton

LS Trader

Weekly Update – 29 July 2018 – LS Trader

The stock markets remain at a critical juncture and saw some chart damage done at the end of the week. This will put the uptrend under pressure in the short-term next week and these markets need to open with strength or support will likely be tested and broken. Bullish sentiment remains high in the S&P 500 but not dangerously so.

Stocks

The S&P 500 made a new high for the current move but had a relatively sharp reversal on Friday. However, the S&P 500 held up better than the Nasdaq 100, where price action on Thursday and Friday did some technical damage. The uptrend in both markets is under pressure this week. However, the long-term trend remains up for both markets.

The Dax has continued its recovery from the June sell-off, and the Dax and the Nikkei are both within range of a long-term trend change to up. Whether we see that trend change this week remains to be seen. The Nikkei is undergoing significant volatility compression and volatility is now at its lowest level since just before the March low and a rally of almost 3000 points in under two months. A big move is in the offing, and at present that move could be up or down.

Commodities

The CRB Commodity Index ended its run of eight consecutive weekly declines, managing a meagre 0.2% gain for the week. The long-term trend remains down for most commodity markets with only a few exceptions.

The metals markets have had a mixed week, but all remain in well-established long-term downtrends. Palladium has been the strongest in the short-term, with a sharp counter-trend rally from the recent lows.

The energy markets have seen some strength this week but remain some way off their recent highs. The long-term trend remains up for now, and recent price action since the May/July highs is corrective.

The grains markets have also seen some corrective price action this week against the prevailing long-term downtrend. Only Rough Rice is currently in an uptrend, but Wheat has shown considerable strength for much of this month and could breakout this coming week.

Currencies

Price action in the currency markets remains corrective in the short-term, with the long-term trend continuing to favour the dollar. Currently, we have two open positions in the currency markets, short British Pound and short the Swiss franc. Several of the remaining majors are within range of breakouts this week.

Interest rate futures

In spite of the near-record long position that commercials hold in interest rate futures, as reported in the commitments of traders report (COT), interest rate futures have been unable to gain any traction and complete a change of trend to up. Weakness has been seen this week, and we may see further selling and a possible test of the recent lows. The long-term trend remains down for the sector.

Good trading

Phil Seaton

LS Trader